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Authorized for public release by the FOMC Secretariat on 1/12/2024

BOARD

OF

GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

DIVISION OF MONETARY AFFAIRS

Date:

June 1, 2018

To:

Research Directors

From:

Trevor A. Reeve

Subject: Learning and misperceptions of policy strategies
The Monetary Policy Strategies section of the June Tealbook (Book A)
contains a box discussing the effects of a change in policy strategy in a situation in
which the public has to learn about monetary policy and, consequently, only gradually
comes to understand the way in which the policy strategy has changed. The box
highlights the important role that expectations formation plays in determining the
effects of a change in policy strategy on economic outcomes. The attached
memorandum--prepared by Martin Bodenstein, James Hebden, and Fabian Winkler-describes the methodology used in the box and provides additional details on the
simulations.
If you have questions about the memo, please feel free to contact Martin
Bodenstein or Fabian Winkler.

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