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Managing expectations

Author

Listed:
  • Yang K. Lu

    (Boston University)

  • Ernesto Pasten

    (Boston University)

  • Robert G. King

    (Boston University)

Abstract

The idea that monetary policy is principally about "managing expectations" has taken hold in central banks around the world. Discussions of expectations management by central bankers, academics and by financial market participants frequently also include the idea that central bank credibility is imperfect. We adapt a familiar macroeconomic model so as to discuss key concepts in the area of expectations management. Our work also exemplifies a model construction approach to analyzing the dynamics of announcements, actions, and credibility that we think makes feasible a wide range of future investigations concerning the management of expectations. Copyright (c) 2008 The Ohio State University.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Yang K. Lu & Ernesto Pasten & Robert G. King, 2008. "Managing expectations," 2008 Meeting Papers 959, Society for Economic Dynamics.
  • Handle: RePEc:red:sed008:959
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    References listed on IDEAS

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    Cited by:

    1. repec:taf:apeclt:v:25:y:2018:i:4:p:278-282 is not listed on IDEAS
    2. Bodenstein, Martin & Hebden, James & Nunes, Ricardo, 2012. "Imperfect credibility and the zero lower bound," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 135-149.
    3. Elmar Mertens, 2010. "Discreet Commitments and Discretion of Policymakers with Private Information," 2010 Meeting Papers 763, Society for Economic Dynamics.
    4. Paul Hubert & Fabien Labondance, 2016. "Central Bank Sentiment and Policy Expectations," Sciences Po publications 2016-29, Sciences Po.
    5. Yang Lu & Ernesto Pasten & Robert King, 2013. "Policy design with private sector skepticism in the textbook New Keynesian model," 2013 Meeting Papers 241, Society for Economic Dynamics.
    6. Lu, Yang K., 2013. "Optimal policy with credibility concerns," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2007-2032.
    7. Lu, Yang K. & King, Robert G. & Pasten, Ernesto, 2016. "Optimal reputation building in the New Keynesian model," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 233-249.
    8. Carlos Carvalho & Tiago Fl´orido & Eduardo Zilberman, "undated". "Transitions in Central Bank Leadership," Textos para discussão 657, Department of Economics PUC-Rio (Brazil).
    9. Stefano Gnocchi & Luisa Lambertini, 2016. "Monetary Commitment and the Level of Public Debt," Staff Working Papers 16-3, Bank of Canada.
    10. Stephen Hansen & Michael McMahon, 2016. "Shocking Language: Understanding the Macroeconomic Effects of Central Bank Communication," NBER Chapters,in: NBER International Seminar on Macroeconomics 2015 National Bureau of Economic Research, Inc.
    11. Benchimol, Jonathan & Bounader, Lahcen, 2018. "Optimal Monetary Policy Under Bounded Rationality," Globalization and Monetary Policy Institute Working Paper 336, Federal Reserve Bank of Dallas.
    12. Paul Hubert & Fabien Labondance, 2016. "Central Bank Sentiment and Policy Expectations," Sciences Po publications 2016-29, Sciences Po.
    13. Paul Hubert & Fabien Labondance, 2016. "The Effect of ECB Forward Guidance on Policy Expectations," Working Papers hal-01394821, HAL.
    14. Robert G. King & Yang K. Lu & Ernesto S. Pastén, 2008. "Managing Expectations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1625-1666, December.
    15. repec:scn:financ:y:2017:i:5:p:140-149 is not listed on IDEAS
    16. Smales, Lee A. & Apergis, Nick, 2016. "The influence of FOMC member characteristics on the monetary policy decision-making process," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 216-231.
    17. Man-Keung Tang & Xiangrong Yu, 2011. "Communication of Central Bank Thinking and Inflation Dynamics," IMF Working Papers 11/209, International Monetary Fund.
    18. Paul Hubert, 2010. "Monetary Policy, Imperfect Information and the Expectations Channel," Sciences Po publications info:hdl:2441/f4rshpf3v1u, Sciences Po.
    19. repec:spo:wpecon:info:hdl:2441/f4rshpf3v1umfa09lat09b1bg is not listed on IDEAS
    20. Lahcen, BOUNADER, 2016. "Optimal Monetary Policy in Behavioral New Keynesian Model," MPRA Paper 74743, University Library of Munich, Germany.
    21. Christian Matthes, 2015. "Figuring Out the Fed—Beliefs about Policymakers and Gains from Transparency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(1), pages 1-29, February.

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