Monetary Policy Committees, Learning and Communication
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Summary:
This paper considers optimal communication by monetary policy committees in a model of imperfect knowledge and learning. The main policy implications are that there may be costs to central bank communication if the public is perpetually learning about the committee's decision-making process and policy preferences. When committee members have heterogeneous policy preferences, welfare is greater under majority voting than under consensus decision-making. Furthermore, central bank communication under majority voting is more likely to be beneficial in this case. It is also shown that a chairman with stable policy preferences who carries significant weight in the monetary policy decision-making process is welfare enhancing.
Series:
Working Paper No. 2010/085
Subject:
Banking Communications in revenue administration Inflation Output gap Supply shocks
English
Publication Date:
April 1, 2010
ISBN/ISSN:
9781451982633/1018-5941
Stock No:
WPIEA2010085
Pages:
41
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