Forward guidance investigation in new Keynesian models

Forward guidance is widely considered a useful tool for improving monetary policy transmission. This paper introduces endogenous Delphic in which future targets are time-varying and dependent on the economy. The results show that performance of inflation-targeting forward depends partially horizon agents’ expectation, while announcing an interim output target could stimulate economy only under rational expectation environment requires short horizon. We also discuss effectiveness Odyssean incorporates authorities’ preferences. indicate effect commitment paths interest-rate rule based expectations.