TY  - JOUR
AU  - Amador,Manuel
AU  - Weill,Pierre-Olivier
TI  - Learning from Prices: Public Communication and Welfare
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14255
PY  - 2008
Y2  - August 2008
UR  - http://www.nber.org/papers/w14255
L1  - http://www.nber.org/papers/w14255.pdf
N1  - Author contact info:
Manuel Amador
Stanford University
Department of Economics
Landau Economics Building
579 Serra Mall, Room 330
Stanford , CA 94305-6072
Tel: 650/725-5257
E-Mail: amador@stanford.edu

Pierre-Olivier Weill
Department of Economics
University of California, Los Angeles
Bunche Hall 8283
Los Angeles, CA 90095
Tel: 310/794-6495
Fax: 310/825-9528
E-Mail: poweill@econ.ucla.edu
AB  - We study the effect of releasing public information about productivity or monetary shocks when agents learn from nominal prices. While public releases have the benefit of providing new information, they can have the cost of reducing the informational efficiency of the price system. We show that, when agents have private information about monetary shocks, the cost can dominate, in that public releases increase uncertainty about fundamentals. In some cases, public releases can create or eliminate multiple equilibria. Our results are robust to adding velocity shocks, imperfectly observable prices, large idiosyncratic shocks, and introducing a bond market.
ER  -