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Author Tesfaselassie, Mewael F.
Source EconStor
Content type Text
Publisher Kiel Institute for the World Economy (IfW)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword Inflation target ♦ Central bank forecasts ♦ Disclosure policy ♦ Forward-looking expectations ♦ Inflationserwartung ♦ Staatliche Information ♦ Inflation Targeting ♦ Signalling ♦ Wirtschaftspolitische Wirkungsanalyse ♦ Theorie ♦ Central Banks and Their Policies ♦ Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ♦ Interest Rates: Determination, Term Structure, and Effects ♦ Monetary Policy
Abstract In a model with forward-looking expectations, the paper examines communication of central bank forecasts when the inflation target is subject to unobserved changes. It characterizes the effect of disclosure of forecasts on inflation and output stabilization and the choice of an active versus passive monetary policy. The paper shows that these choices depend on the slope of the Phillips curve, the central bank's preference weight on inflation relative to output and the ratio of the variability of the inflation target relative to the cost-push disturbance. The paper briefly discusses how disclosure of forecasts may be beneficial for a society that is more concerned about inflation stabilization than the central bank.
Part of series Kiel Working Paper x1319
Learning Resource Type Article
Publisher Date 2007-01-01
Publisher Place Kiel
Rights Holder http://www.econstor.eu/dspace/Nutzungsbedingungen