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Transparency and Cr...
Transparency and Credibility : Monetary Policy with Unobservable Goals
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- Faust, Jon (författare)
- Board of Governors of the Federal Reserve System
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- Svensson, Lars E.O. (författare)
- Stockholms universitet,Institutet för internationell ekonomi
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(creator_code:org_t)
- Stockholm : IIES, 1997
- Engelska 40 s.
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Serie: Seminar Paper / Institute for International Economic Studies, Stockholm University, 0347-8769 ; 636
- Relaterad länk:
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Abstract
Ämnesord
Stäng
- We define and study transparency, credibility, and reputation in a model where the central bank's characteristics are unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more inflationary policy than a high-credibillity bank, in the sense that it induces higher inflation, but a less expansionary policy in the sense that it induces lower inflation and employment than expected. Increased transparency makes the bank's reputation and credibility more sensitive to its actions. This has a moderating influence on the bank's policy. Full transparency of the central bank's intentions is generally socially beneficial, but frequently not in the interest of the bank. Somewhat paradoxically, direct observability of idiosyncratic central bank goals removes the moderating incentive on the bank and leads to the worst equilibrium.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Nyckelord
- Economics
- Nationalekonomi
Publikations- och innehållstyp
- vet (ämneskategori)
- rap (ämneskategori)