Price-Level Determination Under Dispersed Information and Monetary Policy
AbstractThis paper considers the determination of aggregate price level under dispersed information. Central Bank sets policy in response to its noisy measure of the price level, and each agent makes its decisions by observing a subset of data. Information revealed to the agents and Bank is determined endogenously. It is shown that the aggregate state of the economy is not revealed perfectly to anybody but this economy behaves as if it is a representative-agent economy in which the representative agent has perfect information while the Bank has partial information. The Bank has information set affects fluctuations in the price level through its effect on policy.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5570.
Date of creation: Mar 2006
Date of revision:
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Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
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Other versions of this item:
- Kosuke Aoki, 2006. "Price-Level Determination Under Dispersed Information And Monetary Policy," The Japanese Economic Review, Japanese Economic Association, vol. 57(3), pages 406-425.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-08 (All new papers)
- NEP-CBA-2006-04-08 (Central Banking)
- NEP-FMK-2006-04-08 (Financial Markets)
- NEP-MAC-2006-04-08 (Macroeconomics)
- NEP-MON-2006-04-08 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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