| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP14830
|
| DP14830 Monetary Policy with Opinionated Markets |
| Ricardo Caballero; Alp Simsek
|
| 发表日期 | 2020-05-30
|
| 出版年 | 2020
|
| 语种 | 英语
|
| 摘要 | Central banks (the Fed) and markets (the market) often disagree about the path of interest rates. We develop a model where these different views stem from disagreements between the Fed and the market about future aggregate demand. We then study the implications of these disagreements for monetary policy, the term structure of interest rates, and economic activity. In our model, agents learn from the data but not from each other—they are opinionated. In this context, the market perceives monetary policy "mistakes" and the Fed partially accommodates the market's view to mitigate the impact of perceived "mistakes" on output and inflation. The Fed plans to implement its own view gradually, as it expects the market to receive more information and move closer to the Fed's belief. Disagreements about future demand, together with learning, translate into disagreements about future interest rates. Disagreements also provide a microfoundation for monetary policy shocks: after a surprise policy announcement, the market (partially) learns the Fed's belief and the extent of future "mistaken" interest rate changes. We categorize these shocks into three groups: Fed belief shocks, market reaction shocks, and tantrum shocks, and analyze their impact on forward interest rates and economic activity. Tantrum shocks are the most damaging, as they arise when the Fed fails to forecast the forward rates' reaction. These shocks motivate additional gradualism as well as communication policies that reveal the Fed's belief, not to persuade the market (which is opinionated) but to prevent a misinterpretation of the Fed's belief. Finally, we also find that disagreements affect inflation and create a policy trade-off between stabilizing output and inflation. |
| 主题 | Financial Economics
; Monetary Economics and Fluctuations
|
| 关键词 | Monetary policy and shocks
Aggregate demand shocks
The fed's dot plot
The term structure of interest rates
Forward curve
Confident disagreement
Belief shocks
Taper tantrum
Communication
Gradualism
|
| URL | https://cepr.org/publications/dp14830-0
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
|
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/543764
|
推荐引用方式
GB/T 7714 |
Ricardo Caballero,Alp Simsek. DP14830 Monetary Policy with Opinionated Markets. 2020.
|
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