Transparency of Monetary Policy: Theory and Practice

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Transparency has become one of the main features of monetary policymaking during the last decade. This paper establishes some stylized facts. In addition, it provides a systematic overview of the practice of monetary policy transparency around the world. It shows much diversity in information disclosure, even for central banks with the same monetary policy framework, including inflation targeting. Nevertheless, the paper finds significant differences in transparency across monetary policy frameworks. The empirical findings are explained using key insights distilled from the theoretical literature. Thus, this paper aims to bridge the gap between the theory and practice of monetary policy transparency. Terms of use: Documents in EconStor mayJEL Code: E58, D82.

Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries

“…A major change in conduct of monetary policy over the last twenty years has been improvements in transparency Eichengreen, 2007, 2009;Geraats, 2006Geraats, , 2008Geraats, , 2009 This study uses the index developed by Dincer and Eichengreen (2007). Figure 11 Z e a l a n d E u r o a r e a C a n a d a U n i t e d S t a t e s J a p a n S w i t z e r l a n d A u s t r a l i a K o r e a I c e l a n d …”

The Evolution of Central Bank Governance around the World

“…In the theoretical literature, the degree of central bank transparency has implications for average inflation and output and for the volatility of inflation, output, and interest rates (Geraats, 2002, reviews the relevant literature). Few studies, however, have examined the empirical effects of transparency.…”

“…Instead, optimal practices may depend upon the type of monetary policy committee that a central bank has; for example, Geraats (2006) demonstrates that disclosure practices vary widely across monetary policy frameworks. Blinder (2004) has argued that different types of committees organize decision making in different ways and should therefore communicate differently.…”

Monetary Policy Transparency

“…Geraats (2002), Hahn (2002) and Carpenter (2004) focus on the (early) theoretical literature. Geraats (2006Geraats ( , 2009 documents information disclosure practices and trends throughout the world. Blinder, Ehrmann, Fratzscher, De Haan and Jansen (2008) concentrate on the empirical literature on the financial market effects of central bank communications, whereas Van Der Cruijsen and Eijffinger (2010) provide an overview of many theoretical and empirical contributions on the macroeconomic effects of monetary policy transparency.…”