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Informational Advantage and Influence of Communicating Central Banks

Focusing on a set of central banks that publish inflation forecasts in real time, this paper aims to establish whether central bank inflation forecasts influence private inflation forecasts. The response is positive in the five countries studied: Sweden, the United Kingdom, Canada, Switzerland, and Japan. Three hypotheses may explain this central bank influence: central bank forecasts are more accurate than private ones, are based on different information sets, and/or convey signals about future policy decisions and policymakers’ preferences and objectives. We provide evidence that the source of these central banks’ influence is not linked to their forecasting performance.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-04.

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Date of creation: 2009
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Handle: RePEc:fce:doctra:0904
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