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Monetary Policy Transparency:Lessons from Germany and the Eurozone

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  • Iris Biefang-Frisancho Mariscal

    (School of Economics, University of the West of England)

  • Peter Howells

    () (School of Economics, University of the West of England)

Abstract

The conduct of monetary policy emphasises institutional arrangements which make monetary policy decision-making more ‘transparent’. Judged by these institutional features neither the Bundesbank, nor the ECB, score very highly. We test for (i) agents’ average ability to anticipate policy rate changes under the Bundesbank and the ECB and (ii) and agents’ forecasting unanimity of money market rates. Rising forecasting uncertainty may either be due to a lack of ECB transparency or to larger inflation and growth forecasting errors. Our results indicate that inflation forecast spreads widened amongst private agents and that inflation forecasting uncertainty increased the forecasting spread of money market rates

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File URL: http://carecon.org.uk/DPs/0410.pdf
File Function: First version, 2004
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Bibliographic Info

Paper provided by University of the West of England, Department of Economics in its series Discussion Papers with number 0410.

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Length: 18 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:uwe:wpaper:0410

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Related research

Keywords: transparency; yield curve; forecasting uncertainty; Bundesbank; ECB;

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  1. Andrew G Haldane & Vicky Read, 2000. "Monetary policy surprises and the yield curve," Bank of England working papers 106, Bank of England.
  2. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-62, May.
  3. Kuttner, Kenneth N., 2001. "Monetary policy surprises and interest rates: Evidence from the Fed funds futures market," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 523-544, June.
  4. Jorge Sicilia & Gabriel Perez-Quiros, 2002. "Is the European Central Bank (and the United States Federal Reserve) predictable?," Working Paper Series 192, European Central Bank.
  5. William Poole & Robert H & Rasche & Daniel L. Thornton, 2002. "Market anticipations of monetary policy actions," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 65-94.
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Cited by:
  1. Menno Middeldorp, 2011. "Central bank transparency, the accuracy of professional forecasts, and interest rate volatility," Staff Reports 496, Federal Reserve Bank of New York.
  2. Tomáš Holinka, 2010. "Learning Process and Transparency of Central Bank," Politická ekonomie, University of Economics, Prague, vol. 2010(4), pages 458-470.

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