Imperfect Central Bank Communication - Information versus Distraction

By Athanasios Orphanides, Spencer Dale, Pär Österholm

March 1, 2008

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Format: Chicago

Athanasios Orphanides, Spencer Dale, and Pär Österholm. Imperfect Central Bank Communication - Information versus Distraction, (USA: International Monetary Fund, 2008) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous. There is a risk that the central bank can distract the public; this means that the central bank may prefer to focus its communication policies on the information it knows most about. Indeed, conveying more certain information may improve the public's understanding to the extent that it "crowds out" a role for communicating imperfect information.

Subject: Banking, Commercial banks, Communications in revenue administration, Economic forecasting, Inflation targeting

Keywords: Central bank communications, Inflation expectation, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/060
Stock No:

WPIEA2008060
ISBN:

9781451869224
ISSN:

1018-5941

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