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Forward Guidance or Cacophony

Author

Listed:
  • Gamze Demiray
  • Yasin Kursat Onder
  • Ibrahim Unalmis

Abstract

Until about more than a decade ago, central banks were traditionally run by individual governors. However that trend has changed and countries have started to establish monetary policy committees. Potential disadvantage of an individualistic committee (i.e., through voting) over collegial decision making is the possibility of confusing the markets by speaking with too many voices so the effects of central-bank's forward guidance are muted. This paper shows that a central bank run by a governor who is acting alone does a better job in terms of \forward guidance".

Suggested Citation

  • Gamze Demiray & Yasin Kursat Onder & Ibrahim Unalmis, 2014. "Forward Guidance or Cacophony," Working Papers 1425, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1425
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2014/14-25
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    More about this item

    Keywords

    forward guidance; voting; communication;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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