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Article
Monetary Policy Inclinations
Journal of Money, Credit, and Banking (2011)
  • Hans Gersbach, ETH Zurich
  • Volker Hahn, University of Konstanz
Abstract
We examine whether central banks should complement their inflation forecasts with interest rate projections. Introducing a central bank loss function that accounts for deviations from announcements, we incorporate the publication of policy inclinations into a dynamic monetary model. We show that in the presence of cost-push shocks, the publication of interest rate forecasts tends to improve welfare.
Keywords
  • central banks,
  • transparency,
  • Federal Reserve,
  • ECB,
  • policy inclinations,
  • forward guidance
Disciplines
Publication Date
2011
Citation Information
Hans Gersbach and Volker Hahn. "Monetary Policy Inclinations" Journal of Money, Credit, and Banking Vol. 43 Iss. 8 (2011)
Available at: http://works.bepress.com/volker_hahn/8/