Optimal Central Bank Communication

• Published in: IDEAS Working Paper Series from RePEc
• Main Author: Wiederholt, Mirko
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2016
• Subjects: Central banks; Communication; Keynesian theory

Communication has become an increasingly important aspect of monetary policy. This paper studies optimal central bank communication in a monetary DSGE model. The basic model setup resembles a New Keynesian model, but private-sector agents have limited attention and optimally allocate attention. Hous...