Communication without Consensus: Forward Guidance, Central Bank Projections, and Private Sector Expectations

2018 ◽  
Author(s):  
Carola Binder
Keyword(s):  
Private Sector ◽  
Central Bank ◽  
Forward Guidance

scholarly journals Monetary Policy Transparency

2014 ◽  
pp. 67-97
Author(s):  
Petra Geraats
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Central Bank ◽  
Conceptual Framework ◽  
Empirical Evidence ◽  
Central Banks ◽  
Empirical Measures ◽  
Forward Guidance ◽  
The World ◽  
Monetary Policy Transparency

This chapter examines transparency as a key feature of monetary policymaking by central banks around the world. It begins by presenting a conceptual framework for transparency and reviewing empirical measures, practices, and trends in monetary policy transparency. It then looks at theory regarding macroeconomic transparency as well as relevant empirical evidence. It also considers two ways in which monetary policy has become more transparent: the publication of macroeconomic forecasts and analysis and the disclosure of forward guidance about policy actions. The chapter illustrates how transparency allows the private sector to align its expectations with those of the central bank, making monetary policy more effective in the process.

Forward Guidance and the Role of Central Bank Credibility under Heterogeneous Beliefs

2018 ◽  
Author(s):  
Gavin Goy ◽  
Cars H. Hommes ◽  
Kostas Mavromatis
Keyword(s):  
Central Bank ◽  
Heterogeneous Beliefs ◽  
Forward Guidance ◽  
Central Bank Credibility

scholarly journals The monkey in the mirror and other tales of central bank forward guidance

2020 ◽  
Vol 56 (1&2) ◽  
pp. 16-27
Author(s):  
Eli Remolona
Keyword(s):  
Central Bank ◽  
Forward Guidance

scholarly journals The Effect of Central Bank Credibility on Forward Guidance in an Estimated New Keynesian Model

2021 ◽  
Vol 2019 (375) ◽  
Author(s):  
Stephen J. Cole ◽  
◽  
Enrique Martínez-García ◽  
Keyword(s):  
Central Bank ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Forward Guidance ◽  
Keynesian Model ◽  
Central Bank Credibility

The Over-Burdened Central Bank and the Shift Away from Autonomy

2017 ◽  
Author(s):  
Pierre L. Siklos
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Central Banks ◽  
Central Banking ◽  
Forward Guidance ◽  
Self Assessments ◽  
Crisis Conditions ◽  
Central Bankers ◽  
Influence Behavior

Many central banks took on additional responsibilities. Inadequate self-assessments remain unfinished almost a decade after the crisis erupted. Government-central bank relationships need to be conditioned on whether times are normal versus crisis conditions. Transparency confronts ambiguity when central banks must communicate the outlook and the conditionality of their decisions. Forward guidance was taken too far and ended up being futile. Central bankers simply exhausted their ability to influence behavior through mere words or ambiguous statements. This is a self-inflicted wound for institutions that are seen as overburdened. These forces leave central banking more vulnerable than is commonly acknowledged. Squaring the conventional objectives of monetary policy with the unclear aims of financial stability is difficult. Adequate limitations on the authority of central banks have yet to be thoroughly debated. We are nowhere near resolving the inherent tensions between old and new sets of central bank objectives.

scholarly journals State-Dependent Forward Guidance and the Problem of Inconsistent Announcements

2019 ◽  
Vol 20 (4) ◽  
pp. e1019-e1027
Author(s):  
Julian A. Parra-Polania
Keyword(s):  
Central Bank ◽  
The State ◽  
Endogenous Variable ◽  
Specific Variable ◽  
Escape Clause ◽  
Forward Guidance ◽  
State Dependent ◽  
State Of The Economy ◽  
Low Rate

Abstract Forward guidance can be provided as an unconditional promise, i.e. commitment to a specific low policy rate. Alternatively, the promise may include an escape clause, i.e. a condition defining the state of the economy under which the central bank would not keep such a low rate and, instead, it would revert to setting policy under discretion. The escape clause can be expressed as a threshold in terms of a specific variable. The present paper shows that, when such a threshold is expressed in terms of an endogenous variable (e.g. output, inflation), there are cases where it becomes impossible for the central bank to act in a way that is consistent with its promise. Consistency imposes limits on the policy rate that can be set since reverting immediately to the optimal discretionary rate can be incompatible with exceeding the threshold.

scholarly journals Investigating Finance-Growth Nexus: Further Evidence from Nigeria

2018 ◽  
Vol 10 (9) ◽  
pp. 121 ◽  
Author(s):  
Adeola Yahya Oyebowale ◽  
Noah Kofi Karley
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Private Sector ◽  
Central Bank ◽  
Government Expenditure ◽  
Secondary Data ◽  
Financial Sector ◽  
Capital Formation ◽  
Causality Test ◽  
Financial Sector Development

This study investigates the influence of financial sector development on economic growth in Nigeria during the period 1982 to 2015. As such, the study obtained annual secondary data from the Central Bank of Nigeria statistical bulletins and World Bank financial database. The empirical model for this study examines growth in savings, growth in exchange rate, growth in government expenditure, growth in stock market capitalization, growth in credit to private sector, growth in gross capital formation, growth in trade openness and growth in broad money on economic growth in Nigeria. The multiple regression output reveals that growth in government expenditure and growth in gross capital formation are statistically significant on economic growth in Nigeria at 1% and 10% respectively under the period under investigation while other regressors in the model prove to be statistically insignificant. VAR test shows that there is considerable short-run causality running from lags of regressors to economic growth in Nigeria except for lag 1 of growth in exchange rate and lag 2 of growth in credit to private sector. The granger causality test reveals the existence of bi-directional causality between financial sector development and economic growth in Nigeria during the period under investigation. Hence, this study supports the ‘feedback hypothesis’ view on finance-growth. Based on these empirical results, this study recommends effective channeling of funds to the private sector and autonomy of the Central Bank of Nigeria in the use of monetary policy tools.

scholarly journals Heterogeneous private sector information, central bank disclosure, and stabilization policy

2015 ◽  
Vol 82 (2) ◽  
pp. 620-634 ◽  
Author(s):  
Jonathan G. James ◽  
Phillip Lawler
Keyword(s):  
Private Sector ◽  
Central Bank ◽  
Stabilization Policy ◽  
Bank Disclosure

The influence of learning and price-level targeting on central bank forward guidance

2020 ◽  
Vol 65 ◽  
pp. 103213
Author(s):  
Stephen J. Cole
Keyword(s):  
Central Bank ◽  
Price Level ◽  
Forward Guidance

scholarly journals Robustly Optimal Monetary Policy with Near-Rational Expectations

2010 ◽  
Vol 100 (1) ◽  
pp. 274-303 ◽  
Author(s):  
Michael Woodford
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Central Bank ◽  
Optimal Policy ◽  
Rational Expectations ◽  
Stabilization Policy ◽  
Optimal Monetary Policy ◽  
Inflation Target ◽  
Model Consistency ◽  
Long Run

The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs that are close enough to model-consistency. It is found that commitment continues to be important for optimal policy, that the optimal long-run inflation target is unaffected by the degree of potential distortion of beliefs, and that optimal policy is even more history-dependent than if rational expectations are assumed. (JEL C62, D84, E13, E31, E32, E52)

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