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Monetary policy transparency, public commentary, and market perceptions about monetary policy in Canada


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  • Siklos, Pierre L.


The introduction of inflation targets in Canada in 1991 ostensibly clarified the objectives of monetary policy, namely the pursuit of price stability. In doing so, one of the objectives of the new policy was to ensure that the public would henceforth be able to assess more easily monetary policy performance based on the Bank of Canada's record at achieving low and stable inflation. An obvious question then is to ascertain whether in fact, as the Governor the Bank stated recently, "... public commentary on monetary policy since 1991 has involved a fairer assessment of the performance of the Bank of Canada." Using information compiled on commentary about the Bank of Canada, and monetary policy in general, collected from the Globe and Mail and Financial Post national newspapers, we evaluate how favourable or critical such commentaries have been since 1986. In so doing, we examine a sample before inflation control targets were introduced, as well as the period since. The Bank of Canada also aims to influence expectations and financial market perceptions of its performance. Additional tests, using daily interest rate and exchange rates and monthly inflation and inflation forecast data, are presented which shed light on this question. -- Die Einführung von Inflationszielen in Kanada im Jahr 1991 verdeutlichte angeblich das Ziel der Geldpolitik, nämlich Preisstabilität. Mit der neuen Politik sollte unter anderem die Öffentlichkeit fortan den Erfolg der Geldpolitik leichter daran messen können, inwieweit es der Bank von Kanada gelingt, die Inflation stabil auf niedrigem Niveau zu halten. Deshalb liegt die Frage nahe, ob tatsächlich ? wie der Präsident der Zentralbank kürzlich feststellte ? ? ... die Erfolge der Bank von Kanada in der öffentlichen Kommentierung der Geldpolitik seit 1991 fairer beurteilt werden.? Anhand von Kommentaren in den überregionalen Zeitungen Globe and Mail und Financial Post, die sich mit der Bank von Kanada sowie der Geldpolitik allgemein befassen, werten wir aus, wie positiv oder kritisch diese Kommentare seit 1986 ausgefallen sind. Dabei untersuchen wir eine Stichprobe aus der Zeit vor Einführung der Inflationsziele sowie aus der Zeit danach. Die Bank von Kanada versucht auch, die Erwartungen und die Einschätzung ihrer Politik an den Finanzmärkten zu beeinflussen. Ob ihr dies gelingt, wird mit Hilfe von zusätzlichen Tests untersucht, die sich auf tägliche Zinssätze und Wechselkurse sowie monatliche Inflationsdaten und Inflationsprognosedaten stützen.

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2000,08.

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Date of creation: 2000
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Handle: RePEc:zbw:bubdp1:4144

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  1. Willem H. Buiter, 1999. "Alice in Euroland," LSE Research Online Documents on Economics 20226, London School of Economics and Political Science, LSE Library.
  2. Clive Briault & Andrew Haldane & Mervyn King, 1996. "Independence and Accountability," Bank of England working papers 49, Bank of England.
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  5. Eijffinger, S.C.W. & Hoeberichts, M.M. & Schaling, E., 1998. "A Theory of Central Bank Accountability," Discussion Paper 1998-103, Tilburg University, Center for Economic Research.
  6. Faust, J. & Svensson, L.E.O., 1998. "Transparency and Credibility: Monetary Policy with Unobservable Goals," Papers 636, Stockholm - International Economic Studies.
  7. Kari H. Eika & Neil R. Ericsson & Ragnar Nymoen, 1996. "Hazards in implementing a monetary conditions index," International Finance Discussion Papers 568, Board of Governors of the Federal Reserve System (U.S.).
  8. Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
  9. Cukierman, Alex & Meltzer, Allan H, 1986. "A Theory of Ambiguity, Credibility, and Inflation under Discretion and Asymmetric Information," Econometrica, Econometric Society, vol. 54(5), pages 1099-1128, September.
  10. Banaian, King & Burdekin, Richard C K & Willett, Thomas D, 1998. " Reconsidering the Principal Components of Central Bank Independence: The More the Merrier?," Public Choice, Springer, vol. 97(1-2), pages 1-12, October.
  11. Neil, Beattie & Fillion, Jean-François, 1999. "An Intraday Analysis of the Effectiveness of Foreign Exchange Intervention," Working Papers 99-4, Bank of Canada.
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Cited by:
  1. Geraats, P. & Eijffinger, S.C.W. & Cruijsen, C.A.B. van der, 2006. "Does Central Bank Transparancy Reduce Interest Rates?," Discussion Paper 2006-11, Tilburg University, Center for Economic Research.
  2. Meixing Dai, 2009. "Public debt and currency crisis: how central bank opacity can make things bad?," Economics Bulletin, AccessEcon, vol. 29(1), pages 190-198.


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