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Communication of Central Bank Thinking and Inflation Dynamics, Man-Keung Tang, Xiangrong Yu

This paper studies the role of central bank communication of its economic assessment in shaping inflation dynamics. Imperfect information about the central bank's assessment - or the basis for monetary policy decisions - could complicate the private sector's learning about its policy response function. We show how clear central bank communication, which facilitates agents' understanding of policy reasoning, could bring about less volatile inflation and interest rate dynamics, and afford the authorities with greater policy flexibility. We then estimate a simple monetary model to fit the Mexican economy, and use the suggested paramters to illustrate the model's quantitative implications in scenarios where the timing, nature and persistence of shocks are uncertain
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; Literature Review; II. The Model; III. Data and Estimation; Mexico's Inflation Regime; Data for Mexico; Estimation Results; IV. Simulations of Stylized Scenarios; Calibration; The Effect of Uncertainty About "q"; Imperfect Information Regarding the Central Bank's Economic Assessment; V. Concluding Remarks; References; Footnotes
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (54 p.)
Specific Material Designation
Form Of Item

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