Working Paper: NBER ID: w13003
Authors: N. Nergiz Dincer; Barry Eichengreen
Abstract: Greater transparency in central bank operations is the most dramatic change in the conduct of monetary policy in recent years. In this paper we present new information on its extent and effects. We show that the trend is general: a large number of central banks have moved in the direction of greater transparency since the late 1990s. We then analyze the determinants and effects of central bank transparency in an integrated empirical framework. Transparency is greater in countries with more stable and developed political systems and deeper and more developed financial markets. Our preliminary analysis suggests broadly favorable if relatively weak impacts on inflation and output variability.
Keywords: central bank transparency; monetary policy; inflation variability; output variability
JEL Codes: E0; E4; F0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| greater transparency (G38) | improved inflation variability (E31) |
| greater transparency (G38) | improved output variability (L15) |
| greater transparency (G38) | lower inflation persistence (E31) |
| stable political systems (P16) | greater transparency (G38) |
| developed financial markets (N20) | greater transparency (G38) |
| stable political systems (P16) | improved inflation variability (E31) |
| developed financial markets (N20) | improved inflation variability (E31) |
| stable political systems (P16) | improved output variability (L15) |
| developed financial markets (N20) | improved output variability (L15) |