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State-Dependent Effects of Monetary Policy: The Central Bank Information Channel

Author

Listed:
  • Paul Hubert

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

When the central bank and private agents do not share the same information, private agents may not be able to appreciate whether monetary policy responds to changes in the macroeconomic outlook or to changes in policy preferences. In this context, this paper investigates whether the publication of the central bank macroeconomic information set modifies private agents' interpretation of policy decisions. We find that the sign and magnitude of the effects of monetary policy depend on the publication of policymakers' macroeconomic views. Contractionary monetary policy has negative effects on inflation expectations and stock prices only if associated with inflationary news

Suggested Citation

  • Paul Hubert, 2019. "State-Dependent Effects of Monetary Policy: The Central Bank Information Channel," SciencePo Working papers Main hal-03403254, HAL.
    • Handle: RePEc:hal:spmain:hal-03403254
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03403254
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    File URL: https://hal-sciencespo.archives-ouvertes.fr/hal-03403254/document
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    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/5buvtkmlk091prrdje4a0tbkla is not listed on IDEAS
    2. Fergus Cumming & Paul Hubert, 2019. "The role of households' borrowing constraints in the transmission of monetary policy," Working Papers hal-03403257, HAL.
    3. Paul Hubert & Fabien Labondance, 2019. "Central bank tone and the dispersion of views within monetary policy committees," SciencePo Working papers Main hal-03403256, HAL.
    4. Peter Tillmann, 2020. "Financial Markets and Dissent in the ECB’s Governing Council," MAGKS Papers on Economics 202048, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Hubert, Paul & Labondance, Fabien, 2021. "The signaling effects of central bank tone," European Economic Review, Elsevier, vol. 133(C).
    6. Christopher S Sutherland, 2022. "Forward guidance and expectation formation: A narrative approach," BIS Working Papers 1024, Bank for International Settlements.
    7. repec:spo:wpmain:info:hdl:2441/7v8fvu0bf08jcoi4epn8cutjm8 is not listed on IDEAS
    8. Ostapenko, Nataliia, 2020. "Central Bank Communication: Information and Policy shocks," MPRA Paper 101278, University Library of Munich, Germany, revised 21 Jun 2020.
    9. Christopher S. Sutherland, 2020. "Forward Guidance and Expectation Formation: A Narrative Approach," Staff Working Papers 20-40, Bank of Canada.
    10. repec:hal:spmain:info:hdl:2441/5buvtkmlk091prrdje4a0tbkla is not listed on IDEAS
    11. repec:hal:spmain:info:hdl:2441/3mgbd73vkp9f9oje7utooe7vpg is not listed on IDEAS
    12. repec:hal:spmain:info:hdl:2441/7v8fvu0bf08jcoi4epn8cutjm8 is not listed on IDEAS
    13. Fergus Cumming & Paul Hubert, 2019. "The Role of Households' Borrowing Constraints in the Transmission of Monetary Policy This paper investigates how the transmission of monetary policy to the real economy depends on the distribution of ," Documents de Travail de l'OFCE 2019-20, Observatoire Francais des Conjonctures Economiques (OFCE).
    14. repec:spo:wpmain:info:hdl:2441/3mgbd73vkp9f9oje7utooe7vpg is not listed on IDEAS

    More about this item

    Keywords

    Monetary policy; Information processing; signal extraction; Market based inflation expectations; Central bank projections; Real time forecasts;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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