Can a strategy of targeting macro projections be the only guide for monetary policy actions, or could it cause macroeconomic instability in the face of imprecise information? The paper examines how the precision of the indicators affects determinacy in a model with partial information and an...

The paper examines the link between the precision of the available monetary policy indicators and the determinacy of equilibrium in a forward-looking macroeconomic model with partial information and an optimizing central bank. When the information on endogenous variables is not precise enough,...