English, Article, Journal or magazine article edition: Expectations and the Central Banker: Making Decisions the Market Expects to See? [revised] Edward Kutsoati; Sharun Mukand

User activity

Share to:
 
Bookmark: http://trove.nla.gov.au/version/200935
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Expectations and the Central Banker: Making Decisions the Market Expects to See? [revised]
Author
  • Edward Kutsoati
  • Sharun Mukand
Physical Description
  • preprint
Notes
  • Reflecting on his experience as a central banker, Alan Blinder (1998) observed that “while I never saw a single case of a central banker succumbing to the temptation that so worried Kydland and Prescott, I often witnessed central bankers sorely tempted to deliver the policy that the markets expected or demanded.” In this paper we develop a framework that examines conditions under which a central banker is tempted to “follow the markets.” In doing so, we explore the implications of increased market ‘consensus’ on the practice of monetary policy and show that ineciency in policymaking is most likely precisely when there is a very high consensus that economic fundamentals are weak or strong. In addition, our results also shed light on (i) why interest rates may not be high enough even when the central bank’s information suggests a rise in asset prices may be due to ‘bubble’ shock; (ii) why a central banker may be reluctant to adopt a loose monetary policy even when investors seem to be very pessimistic about the path of future output; and (iii) why, contrary to conventional models, we sometimes observe an upward revision of private sector’s forecasts of inflation when the central bank tightens its monetary policy. The results have implications for transparency of monetary policy.
  • RePEc:tuf:tuftec:0418
Language
  • English
Contributed by
OAIster

Get this edition

Other links

  • Set up My libraries

    How do I set up "My libraries"?

    In order to set up a list of libraries that you have access to, you must first login or sign up. Then set up a personal list of libraries from your profile page by clicking on your user name at the top right of any screen.

  • All (1)
  • Unknown (1)
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.
None of your libraries hold this item.

User activity


e.g. test cricket, Perth (WA), "Parkes, Henry"

Separate different tags with a comma. To include a comma in your tag, surround the tag with double quotes.

Be the first to add a tag for this edition

Be the first to add this to a list

Comments and reviews

What are comments? Add a comment

No user comments or reviews for this version

Add a comment