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The Relativity Theory Revisited: Is Publishing Interest Rate Forecasts Really so Valuable?

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Author Info
Adam Kot (Warsaw School of Economics)
Michal Brzoza-Brzezina (National Bank of Poland, Economic Institute, Warsaw School of Economics)

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Abstract

In a New Keynesian model with asymmetric information we show that publication of macroeconomic projections and of the future interest rate path by the central bank can improve macroeconomic outcomes. However, the gains from publishing interest rate paths are small relative to those from publishing macroeconomic projections. Given that most inflation targeting central banks are already publishing macroeconomic projections this means that most gains from increasing transparency in this area may already have been reaped. This, together with the potential costs, may explain the relative reluctance of central banks to publish interest rate paths.

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Publisher Info
Paper provided by National Bank of Poland, Economic Institute in its series National Bank of Poland Working Papers with number 52.

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Length: 24
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:nbp:nbpmis:52

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Related research
Keywords: interest rate path; monetary policy; adaptive learning;

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Find related papers by JEL classification:
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
E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Determination of Interest Rates; Term Structure of Interest Rates

References listed on IDEAS
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    Other versions:
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    Other versions:
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  18. Tarkka , Juha & Mayes, David, 1999. "The Value of Publishing Official Central Bank Forecasts," Research Discussion Papers 22/1999, Bank of Finland. [Downloadable!]
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