Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70534
Authors: 
Melosi, Leonardo
Year of Publication: 
2012
Series/Report no.: 
Working Paper, Federal Reserve Bank of Chicago 2012-05
Abstract: 
We develop a DSGE model in which the policy rate signals the central bank.s view about macroeconomic developments to incompletely informed price setters. The model is estimated with likelihood methods on a U.S. data set including the Survey of Professional Forecasters as a measure of price setters.expectations. The signaling effects of monetary policy are found to be empirically important and dampen the effects of monetary disturbances on inflation. While the signaling effects enhance the Federal Reserve.s ability to stabilize the economy in the face of demand shocks, they play a small role in stabilizing the economy after technology shocks.
Subjects: 
higher-order expectations
imperfect common knowledge
Bayesian econometrics
persistent real effects of nominal shocks
JEL: 
E52
D82
C11
Document Type: 
Working Paper

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