TY  - JOUR
AU  - Romer,Christina D.
AU  - Romer,David H.
TI  - Federal Reserve Private Information and the Behavior of Interest Rates
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5692
PY  - 1996
Y2  - July 1996
UR  - http://www.nber.org/papers/w5692
L1  - http://www.nber.org/papers/w5692.pdf
N1  - Author contact info:
Christina D. Romer
Department of Economics
University of California, Berkeley
549 Evans Hall, #3880
Berkeley, CA 94720
Tel: 510/642-4317
Fax: 510/642-6615
E-Mail: cromer@econ.berkeley.edu

David H. Romer
Department of Economics
University of California
Berkeley, CA 94720-3880
E-Mail: dromer@econ.berkeley.edu
M2  - featured in NBER digest on 1997-01-01
AB  - 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.
ER  -