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The Relativity Theory Revisited: Is Publishing Interest Rate Forecasts Really so Valuable?

Adam Kot and Michal Brzoza-Brzezina
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Adam Kot: Warsaw School of Economics, http://www.sgh.waw.pl

No 52, NBP Working Papers from Narodowy Bank Polski, Economic Research Department

Abstract: In a New Keynesian model with asymmetric information we show that publication of macroeconomic projections and of the future interest rate path by the central bank can improve macroeconomic outcomes. However, the gains from publishing interest rate paths are small relative to those from publishing macroeconomic projections. Given that most inflation targeting central banks are already publishing macroeconomic projections this means that most gains from increasing transparency in this area may already have been reaped. This, together with the potential costs, may explain the relative reluctance of central banks to publish interest rate paths.

Keywords: interest rate path; monetary policy; adaptive learning (search for similar items in EconPapers)
JEL-codes: E52 E58 E43 (search for similar items in EconPapers)
Date: 2008-11
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Citations: View citations in EconPapers (8) Track citations by RSS feed

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