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Paul Hubert
 
''Policy implications of learning from more accurate central bank forecasts''
( 2015, Vol. 35 No.1 )
 
 
How might central bank communication of its internal forecasts assist the conduct of monetary policy? The literature has shown that heterogeneous expectations may have destabilizing effects on aggregate dynamics. This paper analyzes through adaptive learning the policy implications of central bank influence of private forecasts stemming from more accurate central bank forecasts. In this case, the central bank must only respect the Taylor principle to ensure macroeconomic stability, in contrast to the situation where private agents are learning from less accurate central bank forecasts.
 
 
Keywords: Adaptive Learning, Taylor Principle, Monetary Policy
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
D8 - Information, Knowledge, and Uncertainty: General
 
Manuscript Received : Jan 27 2014 Manuscript Accepted : Mar 11 2015

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