Arbeitspapier
Inflation and output volatility under asymmetric incomplete information
The assumption of asymmetric and incomplete information in a standard New Keynesian model creates strong incentives for monetary policy transparency. We assume that the central bank has better information about its objectives than the private sector, and that the private sector has better information about shocks than the central bank. Transparency has the potential to trigger a virtuous circle in which all agents find it easier to make inferences and the economy is better stabilised. Our analysis improves upon existing work by endogenising the volatility of both output and inflation. Improved transparency most likely manifests itself in falling output volatility.
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 1092
- Classification
-
Wirtschaft
Business Fluctuations; Cycles
Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
Monetary Policy
- Subject
-
Asymmetric information
Imperfect credibility
Signal extraction
Dynamisches Gleichgewicht
Geldpolitik
Zentralbank
Asymmetrische Information
Unvollkommene Information
Volatilität
Bruttoinlandsprodukt
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Carboni, Giacomo
Ellison, Martin
- Event
-
Veröffentlichung
- (who)
-
European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2009
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Carboni, Giacomo
- Ellison, Martin
- European Central Bank (ECB)
Time of origin
- 2009
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