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Central Bank accountability and transparency: theory and some evidence

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  • Eijffinger, Sylvester C. W.
  • Hoeberichts, Marco

Abstract

The first part of this paper outlines the concept of democratic accountability of central banks, and compares the legal accountability of the ECB with some other central banks (Bank of Canada, Bank of Japan, Bank of England and the Federal Reserve System). In the second part, we present a theory of central bank accountability. Two aspects of accountability are considered: transparency of actual monetary policy and the question of who bears final responsibility for monetary policy. The paper shows that accountability through transparency leads to a lower expected rate of inflation and less stabilization of supply shocks. Accountability through shifting final responsibility in the direction of the government leads to higher inflationary expectations and more stabilization of supply shocks. -- Der erste Teil dieses Papiers umreißt das Konzept der demokratischen Rechenschaftslegung von Zentralbanken und vergleicht die gesetzlich festgelegte Rechenschaftspflicht der EZB mit der einiger anderer Zentralbanken (Bank of Canada, Bank of Japan, Bank of England und Federal Reserve System). Im zweiten Teil stellen wir eine Theorie über die Rechenschaftspflicht der Notenbanken vor. Dabei werden zwei Aspekte der Rechenschaftspflicht in Betracht gezogen: die Transparenz der aktuellen Geldpolitik und die Frage, wer die endgültige Verantwortung für die Geldpolitik trägt. Das Papier zeigt auf, dass die Rechenschaftspflicht mittels Transparenz zu einer erwarteten niedrigeren Inflationsrate und einer geringeren Stabilisierung von Angebotsschocks führt. Dagegen führt die Rechenschaftspflicht mittels Verlagerung der endgültigen Verantwortung hin zur Regierung zu höheren Inflationserwartungen und einer stärkeren Stabilisierung von Angebotsschocks.

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2000,06.

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Date of creation: 2000
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Handle: RePEc:zbw:bubdp1:4142

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Keywords: monetary policy; central banks; transparency; accountability;

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  1. Petra M. Geraats, 2001. "Why Adopt Transparency? The Publication of Central Bank Forecasts," Macroeconomics, EconWPA 0012011, EconWPA.
  2. J. De Haan & F. Amtenbrink & S.C.W. Eijffinger, 1999. "Accountability of central banks: aspects and quantification," BNL Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 52(209), pages 169-193.
  3. Willem H. Buiter, 1999. "Alice in Euroland," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 37(2), pages 181-209, 06.
  4. Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 273-86, March.
  5. Eijffinger, Sylvester C W & Hoeberichts, Marco & Schaling, Eric, 2000. "A Theory of Central Bank Accountability," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2354, C.E.P.R. Discussion Papers.
  6. Clive Briault & Andrew Haldane & Mervyn King, 1996. "Independence and Accountability," Bank of England working papers, Bank of England 49, Bank of England.
  7. Eijffinger, S-C-W & de Haan, J, 1996. "The Political Economy of Central-Bank Independence," Princeton Studies in International Economics, International Economics Section, Departement of Economics Princeton University, 19, International Economics Section, Departement of Economics Princeton University,.
  8. L. Bini-Smaghi, 1998. "The democratic accountability of the European Central Bank," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 51(205), pages 119-143.
  9. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(4), pages 1169-89, November.
  10. L. Bini-Smaghi, 1998. "The democratic accountability of the European Central Bank," BNL Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 51(205), pages 119-143.
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