Reducing overreaction to central banks' disclosures : theory and experiment

@inproceedings{Baeriswyl2012ReducingOT,
  title={Reducing overreaction to central banks' disclosures : theory and experiment},
  author={Romain Baeriswyl and Camille Cornand},
  year={2012}
}
Financial markets are known for overreacting to public information. Central banks can reduce this overreaction either by disclosing information to a fraction of market participants only (partial publicity) or by disclosing information to all participants but with ambiguity (partial transparency). We show that, in theory, both communication strategies are strictly equivalent in the sense that overreaction can be indi-erently mitigated by reducing the degree of publicity or by reducing the degree… CONTINUE READING
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