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The Equilibrium Degree of Transparency and Control in Monetary Policy

Faust, Jon; Svensson, Lars E. O. - 2022

We examine a central bank's endogenous choice of degree of control and degree of transparency, under both commitment and discretion. Under commitment, we find that the deliberate choice of sloppy control is far less likely under a standard central-bank loss function than reported for a less...

Persistent link: https://www.econbiz.de/10014157375

Transparency and Credibility : Monetary Policy with Unobservable Goals

Faust, Jon - 2010

We define and study transparency, credibility, and reputation in a model where the central bank's characteristics are unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more inflationary policy than a high-credibility bank, in...

Persistent link: https://www.econbiz.de/10013137302

How Should Monetary Policy Be Conducted in an Era of Price Stability?

Svensson, Lars E. O. - 2021

The paper discusses several issues related to how monetary policy should be conducted in an era of price stability. Low inflation (with base drift in the price level) and price-level stability (without such base drift) are compared, and a suitable loss function (corresponding to flexible...

Persistent link: https://www.econbiz.de/10013219290

Credible Commitment to Optimal Escape from a Liquidity Trap : The Role of the Balance Sheet of an Independent Central Bank

Jeanne, Olivier; Svensson, Lars E. O. - 2021

An independent central bank can manage its balance sheet and its capital so as to commit itself to a depreciation of its currency and an exchange-rate peg. This way, the central bank can implement the optimal escape from a liquidity trap, which involves a commitment to higher future inflation....

Persistent link: https://www.econbiz.de/10013213439

Optimal Policy with Partial Information in a Forward-Looking Model : Certainty-Equivalence Redux

Svensson, Lars E. O.; Woodford, Michael - 2021

about the state of the economy in a model with forward-looking variables. This result is used in our previous paper … state of the economy in the context of a fairly general forward-looking rational-expectations model. In particular, our …

Persistent link: https://www.econbiz.de/10013234360

Indicator Variables for Optimal Policy

Svensson, Lars E. O.; Woodford, Michael - 2021

The optimal weights on indicators in models with partial information about the state of the economy and forward …

Persistent link: https://www.econbiz.de/10013237003

Indicator Variables for Optimal Policy Under Asymmetric Information

Svensson, Lars E. O.; Woodford, Michael - 2021

The optimal weights on indicators in models with partial information about the state of the economy and forward … to have information about the state of the economy that the policymaker does not possess. Certainty-equivalence is shown … to apply, in the sense that optimal policy reactions to optimally estimated states of the economy are independent of the …

Persistent link: https://www.econbiz.de/10013218510