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Title:Shifts in the inflation target and communication of central bank forecasts PDF Logo
Authors:Tesfaselassie, Mewael F.
Issue Date:2007
Series/Report no.:Kieler Arbeitspapiere 1319
Abstract:In a model with forward-looking expectations, the paper examines communication of central bank forecasts when the inflation target is subject to unobserved changes. It characterizes the effect of disclosure of forecasts on inflation and output stabilization and the choice of an active versus passive monetary policy. The paper shows that these choices depend on the slope of the Phillips curve, the central bank's preference weight on inflation relative to output and the ratio of the variability of the inflation target relative to the cost-push disturbance. The paper briefly discusses how disclosure of forecasts may be beneficial for a society that is more concerned about inflation stabilization than the central bank.
Subjects:Forward-looking expectations
Inflation target
Central bank forecasts
Disclosure policy
JEL:E58
E42
E43
E52
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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