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Trends in Monetary Policy Transparency

  • Petra M. Geraats

Transparency has become a prominent feature of monetary policy as central banks have greatly increased the amount of information they disclose about monetary policy-making. This paper is the first to systematically analyse transparency trends throughout the world and across monetary policy frameworks. It shows that the most notable change in central bank communications has been the greater prevalence of the publication of macroeconomic forecasts and explanations of monetary policy decisions. The rise in transparency has not been confined to inflation targeters but extends to other monetary policy frameworks, although there are significant differences in information disclosure. Nevertheless, in some respects central banks remain quite opaque, in particular about policy deliberations and policy inclinations. This paper also establishes some stylized facts about the macroeconomic environment. In particular, countries with higher inflation and economic development have undergone larger increases in transparency. Moreover, countries with greater transparency have experienced lower subsequent inflation. Copyright 2009 Blackwell Publishing Ltd

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Article provided by Wiley Blackwell in its journal International Finance.

Volume (Year): 12 (2009)
Issue (Month): 2 (08)
Pages: 235-268

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Handle: RePEc:bla:intfin:v:12:y:2009:i:2:p:235-268
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  1. Faust, J. & Svensson, L.E.O., 1998. "Transparency and Credibility: Monetary Policy with Unobservable Goals," Papers 636, Stockholm - International Economic Studies.
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  8. van der Cruijsen, Carin & Demertzis, Maria, 2007. "The impact of central bank transparency on inflation expectations," European Journal of Political Economy, Elsevier, vol. 23(1), pages 51-66, March.
  9. Petra Geraats, 2005. "Transparency of Monetary Policy: Theory and Practice," CESifo Working Paper Series 1597, CESifo Group Munich.
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