Accession Number:

ADA546075

Title:

Monetary Policy Delelgation and Transparency of Policy Targets: A Positive Analysis

Descriptive Note:

Working paper no. 113

Corporate Author:

UNIVERSITAET DER BUNDESWEHR MUENCHEN NEUBIBERG (GERMANY F R) FAKULTAET FUER LUFT- UND RAUMFAHRTTECHNIK

Personal Author(s):

• Hielscher, Kai

Report Date:

2011-06-01

Pagination or Media Count:

31.0

Abstract:

We show that, in a two-stage model of monetary policy with stochastic policy targets and asymmetric information, the transparency regime chosen by the central bank does never coincide with the regime preferred by society. Independent of societys endogenous choice of delegation, the central bank reveals its inflation target and conceals its output target. In contrast, society would prefer either transparency or opacity of both targets. As a conclusion, the choice of the transparency regime should be part of the optimal delegation solution.

Descriptors:

• *BANKING
• TRANSPARENCIES
• GERMANY
• POLICIES
• MODELS

Subject Categories:

• Economics and Cost Analysis

Distribution Statement:

APPROVED FOR PUBLIC RELEASE