Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152891
Authors: 
Ehrmann, Michael
Fratzscher, Marcel
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 457
Abstract: 
This paper assesses the change in Federal Reserve policy introduced in 1999, with the publication of statements about the outlook for monetary policy (and later about the balance of risks) immediately after each FOMC meeting. We find that markets anticipated monetary policy decisions equally well under this new disclosure regime than before, but arrived at their expectations in different ways. Under the new regime, markets extract information from the statements, whereas before, they needed to revert to other types of Fed communication in the inter-meeting periods, and come to their own assessment of the implications of macroeconomic data releases. Taken together, these findings suggest that the Fed's new disclosure practice may indeed have improved transparency in the sense that information is now released to the markets at an earlier time and with clearer signals, but that the Fed can extract less information from observing market reactions to macroeconomic data releases.
Subjects: 
announcements
communication
disclosure
monetary policy
transparency
JEL: 
E43
E52
E58
G12
Document Type: 
Working Paper

Files in This Item:
File
Size
715.69 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.