Salle, I., Sénégas, M. and Yıldızoğlu, M. (2019). How transparent about its inflation target should a central bank be?: An agent-based model assessment Journal of Evolutionary Economics, 29(1):391--427.

Using an agent-based model, this paper revisits the merits for a central bank of announcing its inflation target. The model preserves the main transmission channels of monetary policy used in stochastic dynamic general equilibrium models{\textendash} namely the consumption and the expectation channels, while allowing for agents{\textquoteright} heterogeneity in both expectations and behavior. We find that, in a rather stable environment such as the Great Moderation period, announcing the target allows for the emergence of a loop between credibility and success: if the target is credible, inflation expectations remain anchored at the target, which helps stabilize inflation, and, in turn, reinforces the central bank{\textquoteright}s credibility. We then tune the degree of heterogeneity in agents{\textquoteright} behavior and the individual learning process to introduce inflationary pressures, accompanied or not by uncertainty affecting the real transmission channel of monetary policy. Even if learning and heterogeneity would a priori lead to thinking favorably about transparency, we show that this virtuous circle is not robust, as transparency may expose the central bank to a risk of credibility loss. In this case, we discuss the potential benefits from partial announcements.