Dallas Fed, Report: Calibrating Central Bank Inflation Messages is Key to Policy Success

“Lessons from the experimental data can be used by a central bank to inform the design of public messages that effectively guide rationally inattentive agents’ behaviors, using minimal attention resources.”

“In a theoretical model that takes as an input the complexity faced by the public interpreting the central bank’s message, I found that, to effectively navigate people’s attention limits, the optimal communication strategy should consider the joint design of content, context and the clarity of public messages—that is, what to send, when to send it and who the intended audience is.”

“Using a central bank’s communication as an effective monetary policy tool involves a difficult balance of precision and clarity. In this balance, it is paramount to account for the limited attention span of the intended audience.”