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Optimal Economic Transparency

Optimal Economic Transparency

Paperback

General Political Science

ISBN10: 1249556805
ISBN13: 9781249556800
Publisher: Bibliogov
Published: Sep 26 2012
Pages: 36
Weight: 0.18
Height: 0.07 Width: 7.44 Depth: 9.69
Language: English
In this paper, I explore the optimal extent to which the central bank should disseminate information among private agents. Individual firms are assumed to have diverse private information, and the central bank provides public information either implicitly, by setting its policy instrument, or explicitly, by making announcements about its short-run targets. The optimal degree of economic transparency is affected differently by cost and demand shocks. More-accurate central bank forecasts of demand shocks reduce optimal transparency, while more-accurate forecasts of cost shocks increase optimal transparency. Increased persistence in demand (cost) disturbances increases (reduces) optimal transparency.

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General Political Science