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Trends in Monetary Policy Transparency

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  • Petra M. Geraats

Abstract

Transparency has become a prominent feature of monetary policy as central banks have greatly increased the amount of information they disclose about monetary policy-making. This paper is the first to systematically analyse transparency trends throughout the world and across monetary policy frameworks. It shows that the most notable change in central bank communications has been the greater prevalence of the publication of macroeconomic forecasts and explanations of monetary policy decisions. The rise in transparency has not been confined to inflation targeters but extends to other monetary policy frameworks, although there are significant differences in information disclosure. Nevertheless, in some respects central banks remain quite opaque, in particular about policy deliberations and policy inclinations. This paper also establishes some stylized facts about the macroeconomic environment. In particular, countries with higher inflation and economic development have undergone larger increases in transparency. Moreover, countries with greater transparency have experienced lower subsequent inflation. Copyright 2009 Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Wiley Blackwell in its journal International Finance.

Volume (Year): 12 (2009)
Issue (Month): 2 (08)
Pages: 235-268

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Handle: RePEc:bla:intfin:v:12:y:2009:i:2:p:235-268

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  1. Petra Geraats, 2005. "Transparency of Monetary Policy: Theory and Practice," CESifo Working Paper Series 1597, CESifo Group Munich.
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  6. Geraats, Petra M, 2000. "Why Adopt Transparency? The Publication of Central Bank Forecasts," CEPR Discussion Papers 2582, C.E.P.R. Discussion Papers.
  7. Svensson, Lars E O, 1996. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," CEPR Discussion Papers 1511, C.E.P.R. Discussion Papers.
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  18. Tong, Hui, 2007. "Disclosure standards and market efficiency: Evidence from analysts' forecasts," Journal of International Economics, Elsevier, vol. 72(1), pages 222-241, May.
  19. Geraats, Petra Maria, 2001. "Precommitment, Transparency and Monetary Policy," Discussion Paper Series 1: Economic Studies 2001,12, Deutsche Bundesbank, Research Centre.
  20. Stephen Morris & Hyun Song Shin, 2005. "Central Bank Transparency and the Signal Value of Prices," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 1-66.
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  22. EllenE. Meade & David Stasavage, 2008. "Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve," Economic Journal, Royal Economic Society, vol. 118(528), pages 695-717, 04.
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