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Credibility and Transparency of Central Banks: New Results Based on Ifo’s World Economicy Survey

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  • Sandra Waller
  • Jakob de Haan

Abstract

This paper reports the results of a survey among private sector economists about credibility and transparency of central banks. In line with the survey of Alan Blinder among central bankers, we asked participants in Ifo’s World Economic Survey to answer questions on the importance and determinants of credibility. The results of both surveys are very comparable. Credibility is considered to be important to attain price stability at low cost, while the best ways to earn credibility are a history of honesty and a high level of central bank independence. According to our respondents, the Federal Reserve is the most credible, transparent and independent central bank out of seven large central banks. The ECB is not perceived as highly credible or tranparent, even though our respondents consider it to be very independent.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1199.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1199

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Keywords: transparency; credibility; independence; monetary policy; ECB;

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References

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  1. Otmar Issing, 2001. "The EURO Area and the single monetary policy," Working Papers 44, Oesterreichische Nationalbank (Austrian Central Bank).
  2. King, Mervyn, 1997. "Changes in UK monetary policy: Rules and discretion in practice," Journal of Monetary Economics, Elsevier, vol. 39(1), pages 81-97, June.
  3. Faust, Jon & Svensson, Lars E O, 1998. "Transparency and Credibility: Monetary Policy with Unobservable Goals," CEPR Discussion Papers 1852, C.E.P.R. Discussion Papers.
  4. Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March.
  5. Berger, Helge & de Haan, Jakob & Eijffinger, Sylvester C W, 2000. "Central Bank Independence: An Update of Theory and Evidence," CEPR Discussion Papers 2353, C.E.P.R. Discussion Papers.
  6. Eijffinger, S.C.W. & Geraats, P., 2006. "How transparent are central banks?," Open Access publications from Tilburg University urn:nbn:nl:ui:12-172467, Tilburg University.
  7. Kenneth N. Kuttner & Adam S. Posen, 1999. "Does talk matter after all? Inflation targeting and central bank behavior," Staff Reports 88, Federal Reserve Bank of New York.
  8. Eijffinger, S.C.W. & Haan, J. de, 2000. "European Monetary and Fiscal Policy," Open Access publications from Tilburg University urn:nbn:nl:ui:12-82796, Tilburg University.
  9. Geraats, Petra M., 2000. "Why Adopt Transparency? The Publication of Central Bank Forecasts," Center for International and Development Economics Research, Working Paper Series qt0hw7h7cp, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  10. Laurence Ball & Niamh Sheridan, 2004. "Does inflation targeting matter?," DNB Staff Reports (discontinued) 118, Netherlands Central Bank.
  11. Georgios Chortareas & David Stasavage & Gabriel Sterne, 2001. "Does it pay to be transparent? International evidence from central bank forecasts," Bank of England working papers 143, Bank of England.
  12. Marvin Goodfriend, 1985. "Monetary mystique : secrecy and central banking," Working Paper 85-07, Federal Reserve Bank of Richmond.
  13. Jensen, Henrik, 2002. " Optimal Degrees of Transparency in Monetary Policymaking," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(3), pages 399-422, September.
  14. Kenneth N. Kuttner, 2000. "Monetary policy surprises and interest rates: evidence from the Fed funds futures markets," Staff Reports 99, Federal Reserve Bank of New York.
  15. Alan S. Blinder, 1999. "Central Bank Credibility: Why Do We Care? How Do We Build It?," NBER Working Papers 7161, National Bureau of Economic Research, Inc.
  16. Adam Posen, 1995. "Central bank independence and disinflationary credibility: a missing link?," Staff Reports 1, Federal Reserve Bank of New York.
  17. Issing, Otmar, 2001. "The Euro Area and the Single Monetary Policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 277-88, October.
  18. Eijffinger, S.C.W., 1993. "Central bank independence in twelve industrial countries," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152908, Tilburg University.
  19. Siklos,Pierre L., 2006. "The Changing Face of Central Banking," Cambridge Books, Cambridge University Press, number 9780521034494, April.
  20. Kenneth N. Kuttner & Adam S. Posen, 2000. "Inflation, Monetary Transparency, and G3 Exchange Rate Volatility," Working Paper Series WP00-6, Peterson Institute for International Economics.
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Cited by:
  1. Federico Ravenna, 2005. "The European Monetary Union as a Commitment Device for New EU Member States," Working Papers 98, Oesterreichische Nationalbank (Austrian Central Bank).
  2. Kaufmann, Daniel & Bellver, Ana, 2005. "Transparenting Transparency: Intial Empirics and Policy Applications," MPRA Paper 8188, University Library of Munich, Germany.

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