Uncertainty and the Signaling Channel of Monetary Policy

104 Pages Posted: 19 Oct 2015 Last revised: 20 Oct 2015

See all articles by Jenny Tang

Jenny Tang

Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: October, 2013

Abstract

A growing body of evidence supports the view that monetary policy actions communicate information about the state of the economy to an imperfectly informed public. Therefore, it is important for policymakers to understand the implications of this signaling channel for optimal policy as well as for the value of central bank communication. This paper studies, both theoretically and empirically, a setting where such a monetary policy signaling channel arises because the policymaker has more information about economic fundamentals than private agents have. In this environment, policy actions taken in response to fundamentals provide a signal to rational private agents about those fundamentals.

JEL Classification: E52

Suggested Citation

Tang, Jenny, Uncertainty and the Signaling Channel of Monetary Policy (October, 2013). FRB of Boston Working Paper No. 15-8, Available at SSRN: https://ssrn.com/abstract=2675701

Jenny Tang (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
175
Abstract Views
836
Rank
309,619
PlumX Metrics