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Type: Journal article
Title: Information acquisition, dissemination, and transparency of monetary policy
Author: Wong, J.
Citation: Canadian Journal of Economics-Revue Canadienne d Economique, 2008; 41(1):46-79
Publisher: Univ Toronto Press Inc
Issue Date: 2008
ISSN: 0008-4085
Abstract: This paper examines the role of transparency in a benevolent monetary authority's policies. Each firm's payoff depends on unobservable macroeconomic conditions and firms may incur a cost to acquire private information about macroeconomic conditions. The policy authority attempts to infer the underlying macroeconomic conditions from a noisy measure of aggregate actions and makes a public announcement to inform firms of this inference. High-quality announcements provide firms the incentive not to gather private information and base actions solely on information contained in policy announcements. However, this makes the observed actions of firms less informative to the policy authority.
RMID: 0020080078
DOI: 10.1111/j.1365-2966.2008.00455.x
Appears in Collections:Economics publications

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