Biological information-processing systems, such as populations of sensory and motor neurons, may use correlations between the firings of individual elements to obtain lower noise levels and a systemwide performance improvement in the dynamic range or the signal-to-noise ratio. Here, we implement such correlations in networks of coupled integrate-and-fire neurons using inhibitory coupling and demonstrate that this can improve the system dynamic range and the signal-to-noise ratio in a population rate code. The improvement can surpass that expected for simple averaging of uncorrelated elements. A theory that predicts the resulting power spectrum is developed in terms of a stochastic point-process model in which the instantaneous population firing rate is modulated by the coupling between elements.