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Central Bank Transparency and the Persistence of ‘Very High’ Inflation

Author

Listed:
  • Carlos Giraldo

    (Fondo Latinoamericano de Reservas - FLAR)

  • Iader Giraldo-Salazar

    (Fondo Latinoamericano de Reservas - FLAR)

  • Jose E. Gomez-Gonzalez

    (Department of Finance, Information Systems, and Economics, City University of New York – Lehman College)

  • Jorge M Uribe

    (Universitat Oberta de Catalunya)

Abstract

We study the determinants of persistently high inflation episodes using duration models. We find that central bank transparency significantly shortens the length of these periods. Using monthly data for 180 countries from 1998 to 2023, we define “very high inflation” as year-over-year inflation exceeding the 95th percentile of a country’s recent historical distribution. The duration analysis indicates that transparent central banks reduce inflation persistence by anchoring expectations and reinforcing credibility. These findings emphasize that clear communication and openness serve as key complements to formal policy frameworks, particularly when the goal is to mitigate persistently high inflation.

Suggested Citation

  • Carlos Giraldo & Iader Giraldo-Salazar & Jose E. Gomez-Gonzalez & Jorge M Uribe, 2025. "Central Bank Transparency and the Persistence of ‘Very High’ Inflation," Documentos de trabajo 021690, FLAR.
    • Handle: RePEc:col:000566:021690
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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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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