|
on Monetary Economics |
| By: | Petra Geraats |
| Abstract: | Transparency has become one of the key features of monetary policy. This paper analyzes the reputational incentives related to transparency, focusing on the publication of central bank forecasts. A simple dynamic monetary policy game shows how transparency reduces inflation, as has been found empirically. Although transparency exposes weak central banks, the negative market feedback in response to secrecy could provide a sufficiently strong inducement to become transparent. Thus, reputational concerns could lead to transparency, even without formal disclosure requirements. |
| Keywords: | transparency, monetary policy, central bank forecasts |
| JEL: | D82 E42 E52 E58 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0473&r=mon |
| By: | Stefan Krause; Fabio Mendez |
| Abstract: | We study how important monetary, exchange-rate and fiscal arrangements are in determining the relative preferences of policy makers for inflation stability. We argue that focusing on policy intentions, represented by these preferences, constitutes a better way of evaluating policy behavior, instead of looking at inflation outcomes that may be unavoidable at times. Using a panel of 34 countries over a period of 25 years we find that a high degree of preference for inflation stability is significantly correlated only with central bank independence and membership to the European Monetary Union for low inflation countries, whereas for high inflation countries, only strict or flexible inflation targeting is relevant for inflation stabilizing policies. Finally, we find no robust evidence suggesting that either adopting an exchange rate anchor or employing fiscal policy contribute towards explaining an inflation averse behavior. |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:emo:wp2003:0501&r=mon |
| By: | DR. GODWIN CHUKWUDUM NWAOBI (QUANTITATIVE ECONOMIC RESEARCH BUREAU, NIGERIA) |
| Abstract: | SINCE 1930, EXPECTATIONS HAVE PLAYED AN IMPORTANT ROLE IN ECONOMIC THEORY AND THIS IS BECAUSE ECONOMICS IS GENERALLY CONCERNED WITH THE IMPLICATIONS OF CURRENT ACTIONS FOR THE FUTURE. THIS PAPER THEREFORE ARGUES THAT THE DEVELOPMENT OF RATIONAL EXPECTATIONS THEORY WILL MAKE A MORE SIGNIFICANT CONTRIBUTION TO ECONOMICS(AND IN PARTICULAR, MONETARY ECONOMICS) IN THE IMPETUS IT GIVES TO RESEARCH ON THE VITAL AREAS OF LEARNING AND PRICE EXPECTATIONS FORMATION |
| Keywords: | RATIONAL EXPECTATIONS, MONETARY THEORY, AUGUMENTED PHILLIPS CURVE, INFLATION, OUTPUT, PRICES |
| JEL: | E10 E50 N10 |
| Date: | 2005–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0501001&r=mon |
| By: | David Andolfatto (Simon Fraser University); Scott Hendry (Bank of Canada); Kevin Moran (Universite Laval) |
| Abstract: | Simple econometric tests reported in the literature consistently report what appears to be a bias in inflation expectations. These results are commonly interpreted as constituting evidence overturning the hypothesis of rational expectations. In this paper, we investigate the validity of such an interpretation. The main tool utilized in our investigation is a computational dynamic general equilibrium model capable of generating aggregate behavior similar to the data along a number of dimensions. By construction, the model embedded the assumption of rational expectations. Standard regressions run on equilibrium realizations of inflation and inflation expectations nevertheless reveal an apparent bias in inflation expectations. In these simulations, the null hypothesis of rational expectations is incorrectly rejected in a large percentage of cases; a result that casts some doubt on conventional interpretations of the evidence. |
| JEL: | E |
| Date: | 2005–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0501002&r=mon |
| By: | Thomas Gottschang (Department of Economics, College of the Holy Cross) |
| Keywords: | currencies, free banking, Manchuria |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0409&r=mon |