COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1405

Communication and Monetary Policy

Jeffrey D. Amato, Stephen Morris and Hyun Song Shin

March 2003

One role of monetary policy is to coordinate expectations in the economy and greater transparency of monetary policy may lead to greater coordination. But if transparent monetary policy helps coordinate expectations, then it must also magnify mistakes.

JEL Classification: C7, E5

Keywords: Communication, monetary policy, transparency, common knowledge