 Partially Anticipated Monetary Policy Shocks – Are They Stabilizing or Destabilizing?Sven Offick and Hans-Werner Wohltmann Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2016, vol. 236, issue 1, 95-127 Abstract: This paper uses a dynamic framework of a small open economy to study the volatility effects of partially anticipated monetary policy shocks in which the public has imperfect information about the size and/or the timing of the future expansionary policy intervention. Our two main results are as follows: (i) Partially anticipated monetary policy shocks may be stabilizing, i. e. lead to a lower volatility than a fully anticipated monetary policy shock of the same form. (ii) However, we typically obtain a trade off in volatilities such that a simultaneous stabilization of inflation and output is not possible. If the public underestimates (overestimates) the size of the shock, output (inflation) may be stabilized. Our results imply that the central bank may have an incentive to withhold information from the public about the true central bank’s intention. Keywords: partial anticipation; news shocks; continuous-time models; monetary policy; volatility; central bank communication (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:236:y:2016:i:1:p:95-127 Access Statistics for this article Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik) is currently edited by Peter Winker More articles in Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik) from De Gruyter |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.