Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/224065 
Year of Publication: 
2020
Series/Report no.: 
Economics Working Paper No. 2020-04
Publisher: 
Kiel University, Department of Economics, Kiel
Abstract: 
Although it is generally accepted that consumer confidence measures are informative signals about the state of the economy, theoretical macroeconomic models designed for the analysis of monetary policy typically do not provide a role for them. I develop a framework with asymmetric information in which the efficacy of monetary policy can be improved, when the imperfectly informed central banks include confidence measures in their information set. The beneficial welfare effects are quantitatively substantial in both a stylized New Keynesian model with optimal monetary policy and an estimated medium-scale DSGE model.
Subjects: 
Consumer confidence
Monetary policy
Asymmetric information
Imperfect Information
New Keynesian macroeconomics
DSGE models
JEL: 
D82
D83
D84
E52
E58
E71
Document Type: 
Working Paper

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