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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Imperfect Central Bank Communication: Information Versus Distraction

Imperfect Central Bank Communication: Information Versus Distraction

Orphanides, Athanasios
Sterholm, P. R.
Osterholm, Par

Paperback

General Political Science

ISBN10: 1249455065
ISBN13: 9781249455066
Publisher: Bibliogov
Published: Sep 20 2012
Pages: 40
Weight: 0.20
Height: 0.08 Width: 7.44 Depth: 9.69
Language: English
Much of the information communicated by central banks is noisy or imperfect. This paper considers the potential benefits and limitations of central bank communications in a model of imperfect knowledge and learning. It is shown that the value of communicating imperfect information is ambiguous. If the public is able to assess accurately the quality of the imperfect information communicated by a central bank, such communication can inform and improve the public's decisions and expectations. But if not, communicating imperfect information has the potential to mislead and distract. The risk that imperfect communication may detract from the public's understanding should be considered in the context of a central bank's communications strategy. The risk of distraction means the central bank may prefer to focus its communication policies on the information it knows most about. Indeed, conveying more certain information may improve the public's understanding to the extent that it crowds out a role for communicating imperfect information.

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