IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/198407010700001141.html
   My bibliography  Save this paper

Efficient Market Responses to Error- Ridden Money Supply Announcements

Author

Listed:
  • Orazem, Peter
  • Falk, Barry

Abstract

This study introduces a model of optimal market response to announced estimates of changes in economic aggregates when the estimates are known to be subject to error. We show that under fairly general conditions, rational economic agents will not take the announcements at face value, but will attempt to extract their own perception of the true change conditional on the announcement. Ignoring this signal extraction process can lead to incorrect conclusions regarding the behavioral response of asset prices to money supply shocks. The model is shown to be consistent with the data on the response of interest rates to money supply announcements.

Suggested Citation

  • Orazem, Peter & Falk, Barry, 1984. "Efficient Market Responses to Error- Ridden Money Supply Announcements," ISU General Staff Papers 198407010700001141, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:198407010700001141
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/b130bbc6-12bc-40c3-8117-c02086efdb0a/content
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:198407010700001141. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.