Optimal Central Bank Communication

Mirko Wiederholt
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Mirko Wiederholt: Goethe University Frankfurt

No 1234, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: Communication has become an increasingly important aspect of monetary policy. This paper studies optimal central bank communication in a monetary DSGE model. The basic model setup resembles a New Keynesian model, but private-sector agents have limited attention and optimally allocate attention. Households and decision-makers in firms choose the attention devoted to fundamentals and announcements by the central bank. I characterize the optimal communication strategy by the central bank.

Date: 2016
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1234

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