Working Paper: CEPR ID: DP3188
Authors: Sylvester C.W. Eijffinger; Petra M. Geraats
Abstract: Central bank transparency has become the topic of a lively public and academic debate on monetary policy. Unfortunately, it has been complicated by the fact that transparency is a qualitative concept that is hard to measure. This Paper proposes a comprehensive index for central bank transparency that comprises the political, economic, procedural, policy and operational aspects of central banking. The index is compiled for nine major central banks. It is based on an analysis of information disclosure practices and reveals a rich variety in the degree of central bank transparency.
Keywords: accountability; central banking; independence; monetary policy; transparency
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political transparency (D73) | Reduced uncertainty about policymakers' preferences (D80) |
| Reduced uncertainty about policymakers' preferences (D80) | Decreased inflation bias (E31) |
| Greater transparency about inflation and output targets (E61) | Reduced uncertainty in static framework (D89) |
| Greater transparency about inflation and output targets (E61) | Increased output variance in dynamic context (C69) |
| Economic transparency (P22) | Enhanced predictability of monetary policy (E52) |
| Procedural transparency (D73) | Improved accountability (H83) |
| Procedural transparency (D73) | Political pressures if central banks lack independence (E58) |
| Operational transparency (G38) | Reduced inflation bias (E31) |
| Operational transparency (G38) | Improved social welfare (D69) |