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Information Design, Signaling, and Central Bank Transparency

Author

Listed:
  • Wataru Tamura

    (Nagoya University)

Abstract

This study examines monetary policy and central bank communication when a monetary instrument signals the central bank's private information. A novel feature is that the central bank ex ante determines how much information it acquires and how much of this information it releases to the public. Using a static model with a neoclassical Phillips curve, I show that an optimal information policy is composed of the full disclosure of the bank's acquired information, eliminating the signaling effect of monetary policy. The optimal signal consists of two linear combinations of three shocks, balancing an informational tradeoff between inflation and output stabilization.

Suggested Citation

  • Wataru Tamura, 2018. "Information Design, Signaling, and Central Bank Transparency," International Journal of Central Banking, International Journal of Central Banking, vol. 14(5), pages 223-258, December.
    • Handle: RePEc:ijc:ijcjou:y:2018:q:4:a:6
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    Citations

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    Cited by:

    1. Tatsushi Okuda & Tomohiro Tsuruga, 2021. "Inflation Expectations and Central Bank Communication with Unknown Prior," IMES Discussion Paper Series 21-E-07, Institute for Monetary and Economic Studies, Bank of Japan.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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