Working Paper: CEPR ID: DP6070
Authors: Carin A.B. van der Cruijsen; Sylvester C.W. Eijffinger
Abstract: We provide an up-to-date overview of the literature on the desirability of central bank transparency from an economic viewpoint. Since the move towards more transparency, a lot of research on its effects has been carried out. First, we show how the theoretical literature has evolved, by looking into branches inspired by Cukierman and Meltzer (1986) and by investigating several, more recent, research strands (e.g. coordination and learning). Then, we summarize the empirical literature which has been growing more recently. Last, we discuss whether: i) the empirical research resolves all theoretical question marks, ii) how the findings of the literature match the actual practice of central banks, and iii) where there is scope for more research.
Keywords: central bank transparency; monetary policy; survey
JEL Codes: E31; E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased central bank transparency (E58) | Improved anticipation of monetary policy (E60) |
| Increased central bank transparency (E58) | Enhanced efficiency of monetary policy conduct (E52) |
| Increased central bank transparency (E58) | Lower interest rate volatility (E43) |
| Increased central bank transparency (E58) | Better macroeconomic outcomes (E19) |
| Increased central bank transparency (E58) | Reduced flexibility in managing inflation expectations (E31) |
| Procedural transparency (D73) | Decreased quality of debate and decision-making within central banks (E58) |
| Increased central bank transparency (E58) | Economic stability (E60) |