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American Economic Review Vol. 101 No. 4 2011

Optimal Policy Intervention and the Social Value of Public Information

Jonathan G. James; Phillip Lawler

School of Business and Economics, Swansea University, Singleton Park, Swansea, SA2 8PP, UK.

Abstract

Svensson (2006) argues that Morris and Shin (2002) is, contrary to what is claimed, pro-transparency. This paper reexamines the issue but with an important modification to the original Morris and Shin framework. Recognizing that central banks impact the economy not only indirectly via public announcements, but also directly through policy actions, we consider the social value of public information in the presence of active policy intervention. Our results strengthen Morris and Shin's conclusions considerably: in particular, we find that public disclosure of the central bank's information is unambiguously, i.e., regardless of parameter values, undesirable.

DOI
10.1257/aer.101.4.1561
Volume
101
Issue
4
Pages
1561-1574
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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