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Monetary Policy Committee Transparency: Measurement,Determinants, and Economic Effects

  • Bernd Hayo

    ()

    (University of Marburg)

  • Ummad Mazhar

    (Université Libre de Bruxelles and Université de Strasbourg)

This paper studies monetary policy committee transparency (MPCT) based on a new index that measures central bankers’ educational and professional backgrounds as disclosed through central bank websites. Based on a novel cross-sectional data set covering 75 central banks, we investigate the determinants of MPCT as well as its economic consequences. We find that past inflation, quality of institutional setup, and extent of Internet use in a country are important determinants of MPCT. MPCT has a robust and significantly negative impact on inflation variability, even after controlling for important macroeconomic variables and institutional transparency, as well as instrumenting MPCT in various ways.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/40-2011_hayo.pdf
File Function: First version, 2011
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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201140.

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Length: 33 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201140
Contact details of provider: Postal: Universitätsstraße 25, 35037 Marburg
Phone: 06421/28-1722
Fax: 06421/28-4858
Web page: http://www.uni-marburg.de/fb02/
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