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Imperfect Central Bank Communication - Information versus Distraction

Athanasios Orphanides (), Spencer Dale and Pär Österholm ()

No 08/60, IMF Working Papers from International Monetary Fund

Abstract: Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous. There is a risk that the central bank can distract the public; this means that the central bank may prefer to focus its communication policies on the information it knows most about. Indeed, conveying more certain information may improve the public's understanding to the extent that it "crowds out" a role for communicating imperfect information.

Keywords: Central banks and their policies; Central banks; Monetary policy; Transparency; Forecasts, Learning, inflation, central bank, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mon
Date: 2008-03-01
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Related works:
Journal Article: Imperfect Central Bank Communication: Information versus Distraction (2011) Downloads
Working Paper: Imperfect Central Bank Communication: Information versus Distraction (2008) Downloads
Working Paper: Imperfect Central Bank Communication: Information versus Distraction (2008) Downloads
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