Heterogeneous information quality; strategic complementarities and optimal policy design

James, Jonathan G.; Lawler, Phillip

doi:10.1016/j.jebo.2012.07.003

Cited by 6 publications

(15 citation statements)

References 19 publications

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“…However, the presence of non‐updating firms introduces the possibility that either full transparency or some degree of partial transparency might be optimal. In this regard, as noted in Section 3, the conclusions echo those arrived at in James and Lawler (), which shares the feature of the current model that the quality of information differs across groups of agents.…”

Section: Discussionsupporting

confidence: 84%

“… In James and Lawler (), the private sector is assumed to comprise two sets of agents, of equal size, distinguished by the precision of the private signals that they observe; as in Cornand and Heinemann (), each agent observes a public signal, disclosed by the policymaker, with a fixed probability common to both sets of agents.…”

mentioning

confidence: 99%

“…An alternative representation of transparency is in terms of Cornand and Heinemann's () concept of the ‘degree of publicity’ which identifies the extent of transparency with the proportion of private sector agents to whom the central bank's signal is disclosed. Cornand and Heinemann's approach is applied in Walsh () and in James and Lawler ().…”

mentioning

confidence: 99%

“… The representation of central bank disclosure policy in terms of the central bank's choice of the precision of the public signal as adopted in the analysis of this paper is important for the finding that, for plausible parameter values, partial transparency might dominate zero transparency. Assuming, instead, that the central bank potentially communicates its own (unmodified) signal only to a proper subset of firms, as in Cornand and Heinemann () and James and Lawler (), the conditions 3 < θ and

σ_{ε}^{2}

≤

σ_{ξ}^{2}

are jointly sufficient to ensure zero disclosure is globally optimal.…”

mentioning

confidence: 99%

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Optimal Transparency and Policy Intervention with Heterogeneous Signals and Information Stickiness

James

Lawler

2016

The Manchester School

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This paper investigates optimal central bank disclosure in an economy in which only a proportion of firms adjusts prices each period to reflect current information. Such information comprises a firm‐specific signal of the current state of aggregate demand and, potentially (depending on the transparency regime) a public signal disseminated by the central bank. The economy has two sources of price dispersion: first, the heterogeneity of the private signals of firms whose prices always reflect current information, and second, the non‐adjustment of prices by firms that fail to update their information from period‐to‐period. Monetary policy is conducted by the central bank to maximize expected welfare, with the study's focus on the optimal degree of transparency. A key finding is that, for plausible values of model parameters, full transparency cannot be optimal: whether zero or partial transparency is desirable then depends on the proportion of firms failing to update their information each period.

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Section: Discussionsupporting

confidence: 84%

mentioning

confidence: 99%

mentioning

confidence: 99%

σ_{ε}^{2}

≤

σ_{ξ}^{2}

are jointly sufficient to ensure zero disclosure is globally optimal.…”

mentioning

confidence: 99%

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Optimal Transparency and Policy Intervention with Heterogeneous Signals and Information Stickiness

James

Lawler

2016

The Manchester School

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“…The principles outlined in the preceding discussion are also central to the conclusions drawn in James and Lawler (). In each of these studies, abstract models incorporating heterogeneous information are applied to examine the social welfare consequences of public disclosure of information that is otherwise private to the policymaker in the presence of optimal stabilization policy.…”

Section: Discussionmentioning

confidence: 87%

Heterogeneous private sector information, central bank disclosure, and stabilization policy

James¹,

Lawler²

2015

Southern Economic Journal

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Conventional wisdom has it that a central bank that uses an informational advantage to undertake active policy intervention can do as well, at least so far as real outcomes are concerned, by making its information publicly available and abstaining from stabilization. This notion is examined using a framework incorporating heterogeneous private sector information concerning aggregate demand shocks. An activist regime, in which the central bank exploits its own information to engage in stabilization, is found to be unambiguously superior to a noninterventionist regime, where the central bank maintains a constant setting of policy but publicly discloses its own information.

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Endogenous Information Acquisition and the Partial Announcement Policy

2014

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We extend the model of Cornand and Heinemann (2008, Economic Journal) and examine how to implement partial announcement by selling public information when the agents' action is strategic complements. In a game of information acquisition, there exist multiple equilibria and the partial announcement equilibrium is unstable if the authorities sell public information at a constant price. However, if the authorities offer an increasing pricing rule, partial announcement equilibrium is stable and implementable.

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Heterogeneous information quality; strategic complementarities and optimal policy design

Cited by 6 publications

References 19 publications

Optimal Transparency and Policy Intervention with Heterogeneous Signals and Information Stickiness

Optimal Transparency and Policy Intervention with Heterogeneous Signals and Information Stickiness

Heterogeneous private sector information, central bank disclosure, and stabilization policy

Endogenous Information Acquisition and the Partial Announcement Policy

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