The 13th Academic Luncheon of the Digital Technology and Finance

Abstract：

Conventional wisdom regards a reduced aggregate noise as welfare improving. This study demonstrates that increased transparency regarding the unobserved state of the economy may reduce social welfare owing to the presence of nominal rigidity. On the one hand, costly business cycle fluctuations and price dispersions arising from nominal rigidity are muted in a noisy economy. On the other hand, an economy with less transparency suffers from efficiency losses due to inefficient coordination in pricing decisions. Monetary policy affects the trade-off, and thus interacts with communication policy. We characterize the conditions under which more transparency reduces social welfare.

Speaker Introduction:

Renbin Zhang is an assistant professor of Economics at Shandong University. His research interests include macroeconomics and macrofinance. His research papers have been published in: Journal of Monetary Economics, Journal of Economic Behavior and Organization. He has received honors: PWC 3535 Finance/Accounting Forum 2021 Best Paper Award, etc.