Does too much Transparency of Central Banks Prevent Agents from Using their Private Information Efficiently?
AbstractThis paper analyses in a simple global games framework welfare effects of different communication strategies of a central bank: it can either publish no more than its overall assessment of the economy or be more transparent, giving detailed reasons for this assessment. The latter strategy is shown to be superior because it enables agents to use private information and to be less dependent on common knowledge. This result holds true even if the strategies of agents are strategic complements, for which case it has been argued that too much transparency might induce agents to neglect their private knowledge.
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Bibliographic InfoPaper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 16.
Date of creation: Dec 2007
Date of revision:
transparency; private information; common knowledge;
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- 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-2008-01-05 (All new papers)
- NEP-CBA-2008-01-05 (Central Banking)
- NEP-KNM-2008-01-05 (Knowledge Management & Knowledge Economy)
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.:
- Axel Lindner, 2003.
"Does Transparency of Central Banks Produce Multiple Equilibria on Currency Markets?,"
IWH Discussion Papers
178, Halle Institute for Economic Research.
- Axel Lindner, 2006. "Does Transparency of Central Banks Produce Multiple Equilibria on Currency Markets?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 1-14, 03.
- Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
- Lindner Axel, 2009.
"Evaluating Communication Strategies for Public Agencies: Transparency, Opacity, and Secrecy,"
The B.E. Journal of Macroeconomics,
De Gruyter, vol. 9(1), pages 1-18, July.
- Axel Lindner, 2008. "Evaluating communication strategies for public agencies: transparency, opacity, and secrecy," IWH Discussion Papers 8, Halle Institute for Economic Research.
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