American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Learning by Sharing: Monetary Policy and Common Knowledge
American Economic Journal: Macroeconomics
vol. 14,
no. 3, July 2022
(pp. 324–64)
Abstract
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 microfounded 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.Citation
Kohlhas, Alexandre N. 2022. "Learning by Sharing: Monetary Policy and Common Knowledge." American Economic Journal: Macroeconomics, 14 (3): 324–64. DOI: 10.1257/mac.20190311Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D84 Expectations; Speculations
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian
- E52 Monetary Policy
- E58 Central Banks and Their Policies
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