Report Number

2000-002

Abstract

Does a central bank, when introducing a new monetary regime designed to reduce inflation, prefer more or fewer economic agents who form informed forecasts of inflation? The relevance of the question arises because the central bank can make a decision about how much information to disseminate about the nature of the new regime. We find that the central bank will prefer a higher proportion of agents who form rational expectations if it disinflates from a high level of inflation but not so if it disinflates from a moderate or low inflation level.

Date of this Version

2000

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