Policy implications of learning from more accurate Central Bank Forecasts

Paul Hubert (1)

1 OFCE - Observatoire français des conjonctures économiques (Sciences Po)

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.

Mots clés: Adaptive Learning; Taylor Principle; Monetary Policy

Domaines: Economies et finances

Paul Hubert. Policy implications of learning from more accurate Central Bank Forecasts. Economics Bulletin, 2015, 35 (1), pp.466 - 474. ⟨hal-03459994⟩