Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171527
Authors: 
Gersbach, Hans
Hahn, Volker
Year of Publication: 
2008
Series/Report no.: 
Economics Working Paper Series 08/84
Abstract: 
In this paper we assess whether forward guidance for monetary policy regarding the future path of interest rates is desirable. We distinguish between two cases where forward guidance for monetary policy may be helpful. First, forward guidance may reveal private information of the central bank. We argue that vague, non-binding statements may be desirable. Second, forward guidance may be used as a commitment device. In this case, policy forecasts may be desirable in a classic inflation-bias framework but not in a New Keynesian framework.
Subjects: 
central banks
transparency
commitment
Federal Reserve
policy inclinations
signaling
JEL: 
E58
D70
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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