You can manage bookmarks using lists, please log in to your user account for this.
Media type:
E-Article
Title:
Optimal Monetary Policy and Transparency under Informational Frictions
Contributor:
TAMURA, WATARU
Published:
Wiley, 2016
Published in:
Journal of Money, Credit and Banking, 48 (2016) 6, Seite 1293-1314
Language:
English
DOI:
10.1111/jmcb.12334
ISSN:
0022-2879;
1538-4616
Origination:
Footnote:
Description:
This paper examines the optimal monetary policy and central bank transparency in an economy where firms set prices under informational frictions. The economy is subject to two types of shocks determining the efficient output level and firms' desired markups. To minimize the welfare‐reducing output gap and price dispersion between firms, the central bank controls firms' incentives and expectations by using a monetary instrument and disclosing information on the realized shocks. This paper shows that an optimal policy comprises the disclosure of a linear combination of the two shocks and the adjustment of monetary instruments contingent on the disclosed information.