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Which kind of transparency? On the need for clarity in monetary policy-making

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  • Winkler, Bernhard

Abstract

In most of the existing academic literature the notion of transparency in monetary policy is defined in too simple terms to be of practical relevance. This paper suggests a conceptual framework, which distinguishes different - and potentially conflicting - aspects of transparency. When there are frictions in communication or imperfections in the processing of information, greater 'openness' (i.e. more information) need not always enhance the 'clarity' of central bank communication. In this perspective transparency primarily hinges on a shared mode of interpretation ('common understanding') between the central bank and its audience. JEL Classification: E42, E52, E58

Suggested Citation

  • Winkler, Bernhard, 2000. "Which kind of transparency? On the need for clarity in monetary policy-making," Working Paper Series 26, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:200026
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    More about this item

    Keywords

    communication; monetray policy strategy; transparency;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • 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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