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

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  • Brzoza-Brzezina, Michal
  • Kot, Adam

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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10296.

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Date of creation: 20 Jul 2008
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Handle: RePEc:pra:mprapa:10296

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

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  1. Glenn D. Rudebusch, 2008. "Publishing central bank interest rate forecasts," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jan25.
  2. Richard Dennis & Federico Ravenna, 2007. "Learning and optimal monetary policy," Working Paper Series 2007-19, Federal Reserve Bank of San Francisco.
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  8. Glenn D. Rudebusch & John C. Williams, 2008. "Revealing the Secrets of the Temple: The Value of Publishing Central Bank Interest Rate Projections," NBER Chapters, in: Asset Prices and Monetary Policy, pages 247-289 National Bureau of Economic Research, Inc.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Michał Brzoza-Brzezina
    by Metablog Obserwatora Finansowego in Obserwator Finansowy on 2009-12-10 11:59:58
  2. Michał Brzoza-Brzezina
    by Metablog Obserwatora Finansowego in Obserwator Finansowy on 2009-12-10 11:59:58
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Cited by:
  1. Phan, Tuan, 2013. "Should Central Banks publish interest rate forecasts? - A Survey," MPRA Paper 44676, University Library of Munich, Germany, revised 01 Mar 2013.
  2. Magdalena Szyszko, 2011. "The interdependences of central bank’s forecasts and economic agents inflation expectations.Empirical study," National Bank of Poland Working Papers, National Bank of Poland, Economic Institute 105, National Bank of Poland, Economic Institute.
  3. Clemens J.M. Kool & Daniel L. Thornton, 2012. "How effective is central bank forward guidance?," Working Papers, Federal Reserve Bank of St. Louis 2012-063, Federal Reserve Bank of St. Louis.
  4. repec:use:tkiwps:1205 is not listed on IDEAS

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