MANAGING EXPECTATIONS: INSTRUMENTS VERSUS TARGETS

• 成果类型: Article
• 署名作者: Angeletos, George-Marios; Sastry, Karthik A.
• 署名单位: Massachusetts Institute of Technology (MIT); National Bureau of Economic Research
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjaa045
• 发表日期: 2021
• 页码: 2467-2532
• 关键词: monetary-policy; public communication; interest-rates; social value; INFORMATION; MODEL; DISCRETION; guidance; prices

摘要

Should policy communications aim at anchoring expectations of the policy instrument (keep interest rates at zero until date tau) or of the targeted outcome (do whatever it takes to bring unemployment down to y%)? We study how the optimal approach depends on a departure from rational expectations. People have limited depth of knowledge and rationality, or form otherwise distorted beliefs about the behavior of others and the general equilibrium (GE) effects of policy. The bite of this distortion on implementability and welfare is minimized by target-based guidance if and only if GE feedback is strong enough. This offers a rationale for why central banks should shine the spotlight on unemployment when faced with a prolonged liquidity trap, a steep Keynesian cross, or a large financial accelerator.