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Static And Dynamic Effects Of Central Bank Transparency

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  • Meixing Dai

Abstract

type="main"> Using a New Keynesian framework, this paper shows that, under optimal discretion and optimal pre-commitment in a timeless perspective, imperfect transparency about the relative weight assigned by the central bank to output-gap stabilization generally reduces the average reaction of inflation to inflation shocks and the volatility of inflation, but increases those of the output gap in static and dynamic terms, and more so when inflation shocks are highly persistent. When inflation shocks are moderately persistent, opacity could improve social welfare if the weight assigned to output-gap stabilization is low and this is more likely under pre-commitment than under discretion.

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  • Meixing Dai, 2016. "Static And Dynamic Effects Of Central Bank Transparency," Bulletin of Economic Research, Wiley Blackwell, vol. 68(1), pages 55-78, January.
  • Handle: RePEc:bla:buecrs:v:68:y:2016:i:1:p:55-78
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    Cited by:

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    4. Julien Pénin, 2012. "Motivation crowding-out: Is there a risk for science?," Working Papers of BETA 2012-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    5. Cardi, Olivier & Restout, Romain, 2015. "Fiscal Shocks In A Two-Sector Open Economy With Endogenous Markups," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1839-1865, December.
    6. Meixing Dai & Qiao Zhang, 2013. "Central bank transparency with the cost channel," Working Papers of BETA 2013-06, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. André, Marine Charlotte & Dai, Meixing, 2017. "Is central bank conservatism desirable under learning?," Economic Modelling, Elsevier, vol. 60(C), pages 281-296.

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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