Abstract
AbstractThis paper studies the optimal dynamic communication strategy of central banks using a Bayesian persuasion game framework. In a dynamic environment, financial market participants and the general public have misaligned interests because the present and future have different relevance in their optimization problems, leading to a novel trade‐off for the monetary authority. Compared to the static benchmark, I show that the central bank (CB's) optimal dynamic communication policy should put a higher weight on talking about the present state than the future. In addition, the CB should strategically send more noisy signals than in the static benchmark.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
