Market Information and Signaling in Central Bank Operations, or, How Often Should a Central Bank Intervene?

Daniel C. Hardy
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Daniel C. Hardy: International Monetary Fund

IMF Staff Papers, 1997, vol. 44, issue 4, 510-533

Abstract: A central bank must decide on the frequency with which it will conduct open market operations and the variability in short-term money market that it will allow. The paper shows how the optimal operating procedure balances the value of attaining an immediate target and broadcasting the central bank's intentions against the informational advantages to the central bank of allowing the free play of market forces to reveal more of the information available to market participants.

JEL-codes: E52 G14 (search for similar items in EconPapers)
Date: 1997
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