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On Fed watching and central bank transparency in an overlapping generations model

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  • Joseph H. Haslag

Abstract

I develop a simple general equilibrium model that integrates fed watching with central bank opaqueness. With the intergenerational conflict, opaqueness can solve a Ramsey problem. With monetary uncertainty as the only source of randomness, transparency is the welfare maximizing policy. With other sources of variation, transparency is costly in the sense that it limits the central bank?s response to intrinsic shocks. In short, opaqueness is the veil that permits the central bank freedom to choose money growth in a way to raise welfare.

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  • Joseph H. Haslag, 2000. "On Fed watching and central bank transparency in an overlapping generations model," Working Papers 0002, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:00-02
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    References listed on IDEAS

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