Skip to main content
alt

Please enter a keyword and click the arrow to search the site

Or explore one of the areas below

Central bank communication design in a Lucas-Phelps economy

Journal

Journal of Monetary Economics

Subject

Economics

Publishing details

Journal of Monetary Economics 2014 Vol 63 p 64-79

Authors / Editors

Myatt D;Wallace C

Biographies

David P Myatt

Publication Year

2014

Abstract

In a Lucas-Phelps island economy, an island has access to many informative signals about demand conditions. Each signal incorporates both public and private information: the correlation of a signal's realizations across the economy determines its publicity. If information sources differ in their publicity then price-formation and expectations-formation processes separate, causing output gaps to open. An output-stabilizing central bank prefers “averagely public” information, and sometimes limits the clarity of its policy announcements to achieve this. The bank's incentive to engage privately in costly information acquisition and transmission is strongest not for the most influential signals, but instead for those which drive the largest wedge between prices and expectations: signals that are far from averagely public.

Available on ECCH

No


Select up to 4 programmes to compare

Select one more to compare
×
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox

×

Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: https://london.edu/my-profile-preferences or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.