Central banks face uncertainty about potential output. We model optimal monetary policy under discretion in a situation in which the central bank adopts a min–max approach to policy. The case for appointing a conservative central banker who puts a larger weight on inflation stabilization...

We show that growth and unemployment forecasts submitted by individual FOMC members do not exhibit herding behavior, while the inflation forecasts show strong evidence of anti-herding. Interestingly, anti-herding is more important for non-voting members than for voters.

This paper shows that monetary policy should be delegated to a central bank that cross-checks optimal policy with information from the Taylor rule. Placing some weight on deviations from a Taylor rule reduces the stabilization bias of discretionary monetary policy.

We analyze the influence of US monetary policy on commodity price volatility. Expected target rate changes and communications decrease volatility, whereas target rate surprises and unorthodox measures increase it. The “calming” effect of communication is reduced during the financial crisis.

We examine how Bank of Canada communications and media reporting on them impacts Canadian bond and stock market returns. Official communications exert a relatively larger influence on the bond market, whereas media coverage is more relevant for the stock market.

We examine the effects of U.S. target rate changes and FOMC communications on European and Pacific equity market returns and find that both have a significant impact. European markets are influenced by a greater variety of communications than Pacific markets.