Code for: "Learning by Sharing: Monetary Policy and Common Knowledge"

Principal Investigator(s): View help for Principal Investigator(s) Alexandre Kohlhas, Institute for International Economic Studies

Version: View help for Version V1

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Project Citation:

Kohlhas, Alexandre. Code for: “Learning by Sharing: Monetary Policy and Common Knowledge.” Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-06-24. https://doi.org/10.3886/E124281V1

Project Description

Summary:

A common view states that central bank releases decrease central banks’ own information about the economy and are harmful if about inefficient disturbances, such as cost-push shocks. This paper shows how neither is true in a micro-founded macroeconomic model in which households and firms learn from central bank releases and the central bank learns from the observation of firm prices. Central bank releases make private sector and central bank expectations closer to common knowledge. This helps transmit dispersed information between the private sector and the central bank. As a result, the release of additional central bank information decreases the central bank’s own uncertainty and can be beneficial, irrespective of the efficacy of macroeconomic fluctuations. A calibrated example suggests that the benefits of disclosure are substantial.

Scope of Project

JEL Classification:
      D82 Asymmetric and Private Information; Mechanism Design
      D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
      E52 Monetary Policy

Geographic Coverage: US

Universe: Countries: United States of America

Data Type(s): program source code

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V1 [2022-06-24]

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