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Inflation and output volatility under asymmetric incomplete information.

Abstract:

The assumption of asymmetric and incomplete information in a standard New Keynesian model creates strong incentives for monetary policy transparency. We assume that the central bank has better information about its objectives than the private sector, and that the private sector has better information about shocks than the central bank. Transparency has the potential to trigger a virtuous circle in which all agents find it easier to make inferences and the economy is better stabilised. Our ana...

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Publisher copy:
10.1016/j.jedc.2010.08.003
Publisher:
Elsevier
Journal:
Journal of Economic Dynamics and Control
Volume:
35
Issue:
1
Pages:
40 - 51
Publication date:
2011-01-01
DOI:
ISSN:
0165-1889
Language:
English
UUID:
uuid:8d11e39d-5a59-4845-9793-c7e682438597
Local pid:
oai:economics.ouls.ox.ac.uk:15150
Deposit date:
2011-08-16

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