The information channel of monetary policy has disappeared in the US (VOX)

The information channel of monetary policy theory – whereby economic agents revise their beliefs after an unexpected monetary policy announcement not only because they learn about the current and future path of monetary policy, but also because they learn new information about the economic outlook – can potentially explain the puzzle of output increasing after a contractionary monetary policy shock. This column argues, however, that the information channel has disappeared in the US, perhaps due to the improved communication strategies implemented by the Federal Reserve.

https://voxeu.org/article/information-channel-monetary-policy-has-disappeared-us

Lukas Hoesch, Barbara Rossi, Tatevik Sekhposyan

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