Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93598
Authors: 
Del Negro, Marco
Giannoni, Marc
Patterson, Christina
Year of Publication: 
2012
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 574
Abstract: 
With short-term interest rates at the zero lower bound, forward guidance has become a key tool for central bankers, and yet we know little about its effectiveness. Standard medium-scale DSGE models tend to grossly overestimate the impact of forward guidance on the macroeconomy - a phenomenon we call the forward guidance puzzle. We explain why this is the case and describe one approach to addressing this issue.
Subjects: 
forward guidance
DSGE models
JEL: 
C53
C54
E52
Document Type: 
Working Paper

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