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Do Central Banks Respond Timely to Developments in the Global Economy?
Author(s) -
Bj⊘rnland Hilde C.,
Thorsrud Leif Anders,
Zahiri Sepideh Khayati
Publication year - 2020
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12335
Subject(s) - interest rate , economics , central bank , financial market , monetary economics , monetary policy , macroeconomics , international economics , finance
Our analysis suggests; they do not! We arrive at this conclusion by showing that revisions to the published interest rate path projections from the central banks in New Zealand, Norway and Sweden can be predicted by timely and forward‐looking international indicators. Furthermore, using individual country and Panel VARs, identified with an external instrument method, we show that the policy surprises induced by the predictable revisions likely contain information about how the central banks assess past, current and future economic conditions and thereby leads to a positive co‐movement between the interest rate and both financial markets and the macroeconomy.