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Which kind of transparency? On the need for clarity in monetary policy-making

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Author Info
Bernhard Winkler () (European Central Bank, Kaiserstrasse 29, Postfach 16 03 19, 60066 Frankfurt am Main, Germany.)
Abstract

In most of the existing academic literature the notion of transparency in monetary policy is defined in too simple terms to be of practical relevance. This paper suggests a conceptual framework, which distinguishes different - and potentially conflicting - aspects of transparency. When there are frictions in communication or imperfections in the processing of information, greater "openness" (i.e. more information) need not always enhance the "clarity" of central bank communication. In this perspective transparency primarily hinges on a shared mode of interpretation ("common understanding") between the central bank and its audience. JEL Classification: E42; E52; E58; F58.

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Paper provided by European Central Bank in its series Working Paper Series with number 26.

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Length: 36 pages
Date of creation: Aug 2000
Date of revision:
Handle: RePEc:ecb:ecbwps:20000026

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Related research
Keywords: Transparency; monetary policy strategy; communication.;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stephen Morris & Hyun Song Shin, 2001. "The CNBC Effect: Welfare Effects of Public Information," Cowles Foundation Discussion Papers 1312, Cowles Foundation, Yale University. [Downloadable!]
  2. Camille Cornand & Frank Heinemann, 2006. "Optimal Degree of Public Information Dissemination," Discussion Papers 158, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  3. Spencer Dale & Athanasios Orphanides & Par Osterholm, 2008. "Imperfect Central Bank Communication: Information versus Distraction," Working Papers 2008-1, Central Bank of Cyprus, revised Mar 2008. [Downloadable!]
    Other versions:
  4. Alex Cukierman, 2002. "Are contemporary central banks transparent about economic models and objectives and what difference does it make?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 15-36. [Downloadable!]
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  5. Ana Lasaosa, . "Learning the rules of the new game? Comparing the reactions in financial markets to announcements before and after the Bank of England's operational independence," Bank of England working papers 255, Bank of England. [Downloadable!]
  6. Georgios Chortareas & David Stasavage & Gabriel Sterne, . "Does it pay to be transparent? International evidence from central bank forecasts," Bank of England working papers 143, Bank of England. [Downloadable!]
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  7. Cukierman, Alex, 2007. "The Limits of Transparency," CEPR Discussion Papers 6475, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Lavan Mahadeva, . "A model of market surprises," Bank of England working papers 327, Bank of England. [Downloadable!]
  9. TUYSUZ, Sukriye, 2007. "Central Bank transparency and the U.S. interest rates level and volatility response to U.S. news," MPRA Paper 5217, University Library of Munich, Germany. [Downloadable!]
  10. Eijffinger, Sylvester C W & Geraats, Petra M, 2002. "How Transparent are Central Banks?," CEPR Discussion Papers 3188, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Katerina Smídková & Ales Bulir, 2008. "Striving to Be "Clearly Open" and "Crystal Clear": Monetary Policy Communication of the CNB," IMF Working Papers 08/84, International Monetary Fund. [Downloadable!]
    Other versions:
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