Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175198 
Year of Publication: 
2017
Publisher: 
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft, Kiel und Hamburg
Abstract: 
We study the extent to which the belief-formation process affects the dynamics of macroeconomic variables when the central bank uses forward guidance. Standard sticky-price models imply that far future forward guidance has huge and implausible effects on current outcomes, these effects grow in its horizon (forward guidance power puzzle). By a parsimonious macro-model that allows for the role of bounded rationality and heterogeneous agents, we obtain tempered responses for real and nominal variables.
Subjects: 
forward guidance power
heterogeneous agents
bounded rationality
monetary policy
announcements
JEL: 
E40
E50
E21
Document Type: 
Preprint

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