Secrecy of Monetary Policy and the Variability of Interest Rates
AbstractThis paper addresses the issue of how secrecy of the short-run monetary policy objectives affects the behavior of the federal-funds rate. Secrecy is modeled by assuming that financial markets are unc ertain about a parameter in the Federal Reserve reaction function. Th ey learn over time about this parameter, by means of Bayes rule, and this learning process is reflected in the time path of interest rates and of reserve aggregates. The main result of the paper is that secr ecy tends to increase the volatility of the funds rate and of reserve aggregates. Copyright 1987 by Ohio State University Press.
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Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 19 (1987)
Issue (Month): 4 (November)
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Other versions of this item:
- Guido Tabellini, 1986. "Secrecy of Monetary Policy and the Variability of Interest Rates," UCLA Economics Working Papers 426, UCLA Department of Economics.
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