@techreport{20.500.12134/6986,
author = {Parra-Polanía, Julián Andrés},
year = {2018},
month = {1},
url = {https://repositorio.banrep.gov.co/handle/20.500.12134/6986},
abstract = {Florez-Jimenez and Parra-Polania (2016) show that unconditional forward guidance (FG)
performs poorly except in the most extreme zero lower-bound (ZLB) events and that for
any ZLB situation it is better to resort to state-dependent (threshold-based) FG. The model
of that paper is solved under the assumption that the threshold (to revert to the optimal
discretionary policy) is announced in terms of an exogenous variable (the demand shock).
The present paper shows that, when consistency of announcements is not considered, the
solution does not change when the threshold is announced in terms of an endogenous variable
(output or ináation). However, the paper also illustrates the fact that an endogenous-variable
threshold gives rise to inconsistency: the action taken may not conform to the central bank
announcement. Consistency imposes limits on the policy rate that can be set since reverting
to the optimal discretionary rate can be incompatible with exceeding the threshold.},
publisher = {Banco de la República de Colombia},
booktitle = {Borradores de Economía},
volume = {Borradores de Economía; No. 1035},
keywords = {Orientación hacia adelante},
keywords = {Límite inferior cero},
keywords = {La política monetaria},
keywords = {Anuncios de la Banca Central},
title = {State-dependent Forward Guidance and the Problem of Inconsistent Announcements},
keywords = {Forward guidance},
keywords = {Zero-lower bound},
keywords = {Central bank announcements},
keywords = {Monetary policy},
keywords = {Threshold},
doi = {https://doi.org/10.32468/be.1035},
}