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Are Contemporary Central Banks Transparent about Economic Models and Objectives and What Difference Does it Make?

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  • Cukierman, Alex

Abstract

This paper documents the opaqueness of central banks about the economic models they use to choose policy but argues that this is largely due to the lack of consensus about the correct model of the economy within the economic profession. The latter is illustrated by contrasting three currently popular models of the transmission mechanism. Although the inflation targets of Western central banks are currently quite clear they tend to be hazy about their output targets and about whether they are strictor flexible inflation targeters (in Svensson's (1997) sense), and in the second case, how flexible. They are remarkably silent about the shape of their loss function in the entire range of output gaps. The second part of the paper first reviews the case for believing that at least some central banks are, given inflation, more averse to negative than to positive output gaps and then investigates the consequences of this asymmetry for average inflation. It is shown, for both an expactations augmented Phillips curve as well as for a New -Keynesian transmission mechanism, that in the presence of uncertainty about the upcoming state of the economy flexible inflation targeters with assymetric objectives induce an onflation bias even if their output target is the potential level. Furtehrmore the inflationary tendencies of policymakers who believe in sticky prices are stronger than of those who do not. But, provided prices are really in sticky, the economy is non neutral even in the long run, and the policies of the former also induce a higher level of output. The consequences of transparency about those mechanisms for credibility are evaluated. -- Dieses Papier zeigt zunächst, dass Notenbanken hinsichtlich des Modells, das sie ihrer Politik zugrundelegen, Stillschweigen wahren. Es wird weiterhin argumentiert, dass dies daran liegt, dass sich die Volkswirte über das richtige Modell nicht einig sind. Dazu werden 3 verbreitete Modelle des Transmissionsprozesses einander gegenübergestellt. Währende die Inflationsziele westlicher Zentralbanken recht klar sind, besteht größere Unsicherheit über ihre Outputziele und darüber, ob sie ihr Inflationsziel strikt oder flexibel (und gegebenenfalls wie flexibel) anstreben (im Sinne von Svensson, 1997). Zentralbanken sind auch bezüglich der Form ihrer Verlustfunktion verschwiegen, insbesondere was die Output-Lücke angeht. Dies gilt, obwohl in einer unsicheren Welt Politikentscheidungen von der Form der Verlustfunktion abhängen. Der zweite Teil des Papiers geht zunächst auf den Fall ein dass zumindestens einige Zentralbanken, bei gegebener Inflation eine größere Abneigung gegenüber negativen als gegenüber positiven Output-Lücken haben. Die Folgen dieser Assymetrie für die durchschnittliche Inflation werden untersucht. Sowohl bei einer erwartungsabhängigen Phillipskurve als auch bei einem Neo-Keynesianischen Transmissionsmechanismus haben Zentralbanken mit einer flexiblen Inflationsrate und einer asymmetrischen Zielfunktion mit einem Inflationsbias zu tun. Das gilt selbst wenn das Outputziel mit dem Produktionspotential übereinstimm. Zudem sind die Inflationstendenzen höher wnn Wirtschaftspolitiker daran glauben, dass sich die Preise nur allmählich an ihr Gleichgewicht anpassen, als wenn sie solche Vorstellungen nicht hätten. Wenn allerdings solche Vorstellungen über die Preise tatsächlich zutreffen, dann ist Geld auch langfristig nicht neutral. die Politiker vom ersten Typ ermöglcihen dann ein höheres Output-Niveau. Es wird geprüft, welche Folgen es für die Glaubwürdigkeit hat, wenn für Transparenz über diese Mechanismen gesorgt wird.

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2001,05.

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Date of creation: 2001
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Handle: RePEc:zbw:bubdp1:4151

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