Heterogeneous private sector information, central bank disclosure, and stabilization policy
Jonathan G. James () and
Phillip Lawler ()
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Jonathan G. James: College of Business and Economics, Swansea University, Singleton Park, Swansea SA2 8PP, United Kingdom
Phillip Lawler: College of Business and Economics, Swansea University, Singleton Park, Swansea SA2 8PP, United Kingdom
Southern Economic Journal, 2015, vol. 82, issue 2, 620-634
Conventional wisdom has it that a central bank that uses an informational advantage to undertake active policy intervention can do as well, at least so far as real outcomes are concerned, by making its information publicly available and abstaining from stabilization. This notion is examined using a framework incorporating heterogeneous private sector information concerning aggregate demand shocks. An activist regime, in which the central bank exploits its own information to engage in stabilization, is found to be unambiguously superior to a noninterventionist regime, where the central bank maintains a constant setting of policy but publicly discloses its own information.
JEL-codes: D82 E52 E58 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sej:ancoec:v:82:2:y:2015:p:620-634
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