Debate: Strategic uncertainty in central bank communication and policy—A madman theory approach

Q: What does this research mean for the field?

The 'madman theory' of strategic uncertainty can be a beneficial framework for understanding and conducting central bank communication and policy during contemporary geopolitical and political crises. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

Edoardo Beretta; Vera Dianova; Rudi Palmieri

doi:10.1080/09540962.2025.2550635

September 2, 2025Public Money & ManagementOpen Access

Debate: Strategic uncertainty in central bank communication and policy—A madman theory approach

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Key Points

The aim is to explore how the madman theory influences central bank communication strategies and policy decisions.
Analysis of historical examples of the madman theory in geopolitical contexts.
Discussion on the implications of central bank communication during strategic uncertainty.
Findings suggest that strategic uncertainty can enhance the effectiveness of coercive bargaining.
Central bank policies influenced by the madman theory may lead to varying economic outcomes based on public perception.

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Implication

Debate examines madman theory's impact on central bank policy amid geopolitical tensions, suggesting communication strategies matter.

Abstract

The madman theory is back in vogue. Since Russia’s invasion of Ukraine in 2022 and the start of Donald J. Trump’s second mandate in 2024, the theory ‘that it can be beneficial in coercive bargainin...

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Beretta et al. (2025) studied this question.

synapsesocial.com/papers/6a72ac27af0c21e9392986b1 https://doi.org/10.1080/09540962.2025.2550635

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Debate: Strategic uncertainty in central bank communication and policy—A madman theory approach

Key Points

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Implication

Abstract

Discussion

Cite This Study

Debate: Strategic uncertainty in central bank communication and policy—A madman theory approach

Key Points

Ask about this paper

Implication

Abstract

Discussion

Cite This Study

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