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Marcelo de C. Griebeler
''Strategically reported inflation expectation: a cheap-talk approach''
( 2019, Vol. 39 No.1 )
We study the strategic relationship between a central bank and a biased economic agent (forecaster) responsible for reporting the economy's inflation expectation to the former. Through a simple cheap-talk model, we show that the possibility of informative communication between the above players increases as: (i) the forecaster's bias decreases; (ii) the degree in which expectations affect current inflation increases; and (iii) the uncertainty about the true value of the inflation expectation - measured by its variance - increases. Our analysis is a first step towards a deeper comprehension of the strategic relationship between central banks and those responsible for reporting inflation expectation.
Keywords: monetary policy, central bank, survey-based measures, game theory.
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Manuscript Received : Nov 21 2018 Manuscript Accepted : Feb 18 2019

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