On the social cost of transparency in monetary economies

David Andolfatto ()

No 2010-001, Working Papers from Federal Reserve Bank of St. Louis

Abstract: I study a class of models commonly used to motivate monetary exchange, extended to include a physical asset whose expected short-run return is subject to exogenous news events, but whose expected long-run return is independent of this information. I show that there are circumstances in which the nondisclosure of news by an asset manager is welfare-improving. When nondisclosure is infeasible, the framework admits a role for government debt. The theory is used to interpret the nondisclosure practices of reputable financial agencies and suggests caveats for legislation designed to promote financial market transparency.

Keywords: Transparency; Monetary policy (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Working Paper: On the Social Cost of Transparency in Monetary Economies (2010)
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