PRICE-LEVEL DETERMINATION UNDER DISPERSED INFORMATION AND MONETARY POLICY

This paper considers the determination of aggregate price level under dispersed information.A Central Bank sets policy in response to its noisy measure of the price level, andeach agent makes its decisions by observing a subset of data. Information revealed to theagents and the bank is determined endogenously. It is shown that the aggregate state ofthe economy is not revealed perfectly to anybody but this economy behaves as if it is arepresentative-agent economy in which the representative agent has perfect informationwhile the Bank has partial information. The Bank’s information set affects fluctuations inthe price level through its effect on policy.[...]

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Year of publication:	2006-09-03
Authors:	Aoki, Kosuke
Institutions:	London School of Economics and Political Science
Published in:	London School of Economics and Political Science - Publications The Japanese Economic Review ;Vol. 57, No. 3, September 2006, 406-425
Subject:	Bank \| Notenbank \| Central Bank \| Geldpolitik \| Information \| information \| Preisniveau

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Extent:	160768 bytes 20 p. application/pdf
Type of publication:	Article
Language:	English
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies ; Specific management methods ; Financial theory ; Management of financial services: stock exchange and bank management science (including saving banks) ; Individual Articles ; No country specification
Source:	USB Cologne (business full texts)