NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Federal Reserve Private Information and the Behavior of Interest Rates

Christina D. Romer, David H. Romer

NBER Working Paper No. 5692
Issued in July 1996
NBER Program(s):   EFG   ME

Many authors argue that asymmetric information between the Federal Reserve and the public is important to the conduct and the effects of monetary policy. This paper tests for the existence of such asymmetric information by examining Federal Reserve and commercial inflation forecasts. We demonstrate that the Federal Reserve has considerable information about inflation beyond what is known to commercial forecasters. We also provide evidence that monetary policy actions provide signals of the Federal Reserve's private information and that commercial forecasters modify their forecasts in response to those signals. These findings may explain why long-term interest rates typically rise in response to shifts to tighter monetary policy.

download in pdf format
   (1688 K)

email paper

This paper is available as PDF (1688 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5692

Published: Romer, Christina D. and David H. Romer. "Federal Reserve Information And The Behavior Of Interest Rates," American Economic Review, 2000, v90(3,Jun), 429-457.

Users who downloaded this paper also downloaded these:
Campbell and Mankiw Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence
Romer and Romer Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz
Bernanke w3487 The Federal Funds Rate and the Channels of Monetary Transnission
Cecchetti w14134 Crisis and Responses: the Federal Reserve and the Financial Crisis of 2007-2008
Dooley, Folkerts-Landau, and Garber w10332 The Revived Bretton Woods System: The Effects of Periphery Intervention and Reserve Management on Interest Rates & Exchange Rates in Center Countries
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us