Monetary Policy Inclinations

Hans Gersbach and Volker Hahn

No 6761, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine whether the publication of forecasts concerning the likely future conduct of monetary policy is socially desirable. Introducing a new central bank loss function that accounts for the deviations from announcements, we incorporate forecasts about future inflation and interest rates into a dynamic monetary model. We show that the announcement of future interest rates is always socially detrimental. However, medium-term inflation projections tend to increase welfare.

Keywords: Central banks; Commitment; Ecb; Federal Reserve; Policy inclinations; transparency (search for similar items in EconPapers)
JEL-codes: E58 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-cba and nep-mac
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Citations: View citations in EconPapers (5)

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Journal Article: Monetary Policy Inclinations (2011)
Journal Article: Monetary Policy Inclinations (2011)
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