How should policy be optimally designed when a monetary authority faces a private sector that is somewhat skeptical about policy announcements and which interprets economic data as providing evidence about the monetary authority's preferences or its ability to carry through on policy plans? To...

We study the role rumors play in revolutions using a global game model. Agents with diverse private information rationally evaluate the informativeness of rumors about the regime strength. Without communication among agents, wild rumors are discounted and agents are generally less responsive to...