Demertzis, Maria; Hallet, Andrew Hughes - de Nederlandsche Bank - 2004
In this paper we examine the consequences of having a Central Bank whose preferences are state contingent. This has … been identified in the literature as a Central Bank that is 'rationally inattentive' or 'constructively ambiguous'. The new … form rational expectations and internalise the uncertainty about the Central Bank's preferences in full. Alternatively, and …