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Changing central bank transparency in Central and Eastern Europe during the financial crisis

Author

Listed:
  • Csávás, Csaba
  • Erhart, Szilárd
  • Naszódi, Anna
  • Pintér, Klára

Abstract

There is ample empirical evidence in the literature for the positive effect of central bank transparency on the economy. The main channel is that transparency reduces the uncertainty regarding future monetary policy and thereby it helps agents to make better investment, and saving decisions. In this paper, we document how the degree of transparency of central banks in Central and Eastern Europe has changed during periods of financial stress, and we argue that during the recent financial crisis central banks became less transparent. We investigate also how these changes affected the uncertainty in these economies, measured by the degree of disagreement across professional forecasters over the future short-term and long-term interest rates and also by their forecast accuracy.

Suggested Citation

  • Csávás, Csaba & Erhart, Szilárd & Naszódi, Anna & Pintér, Klára, 2012. "Changing central bank transparency in Central and Eastern Europe during the financial crisis," MPRA Paper 40335, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40335
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    File URL: https://mpra.ub.uni-muenchen.de/40335/1/MPRA_paper_40335.pdf
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    References listed on IDEAS

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    1. Michael Ehrmann & Sylvester Eijffinger & Marcel Fratzscher, 2012. "The Role of Central Bank Transparency for Guiding Private Sector Forecasts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 1018-1052, September.
    2. Csaba Csávás & Szilárd Erhart & Dániel Felcser & Anna Naszodi, 2012. "Which Aspects of Central Bank Transparency Matter? Constructing a Weighted Transparency Index," MNB Working Papers 2012/6, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. William Allen & Richhild Moessner, 2010. "Central bank co-operation and international liquidity in the financial crisis of 2008-9," BIS Working Papers 310, Bank for International Settlements.
    4. Eijffinger, Sylvester C.W. & Geraats, Petra M., 2006. "How transparent are central banks?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 1-21, March.
    5. Georgios Chortareas & David Stasavage & Gabriel Sterne, 2002. "Does it pay to be transparent? international evidence form central bank forecasts," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 99-118.
    6. William A. Allen & Richhild Moessner, 2010. "Central Bank co-operation and International liquidity in the financial crisis of 2008-09," FMG Special Papers sp187, Financial Markets Group.
    7. Eric T. Swanson, 2004. "Federal Reserve transparency and financial market forecasts of short-term interest rates," Finance and Economics Discussion Series 2004-06, Board of Governors of the Federal Reserve System (U.S.).
    8. Subir Lall & Roberto Cardarelli & Selim Elekdag, 2009. "Financial Stress, Downturns, and Recoveries," IMF Working Papers 09/100, International Monetary Fund.
    9. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
    10. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
    11. Stephan Danninger & Irina Tytell & Ravi Balakrishnan & Selim Elekdag, 2009. "The Transmission of Financial Stress from Advanced to Emerging Economies," IMF Working Papers 09/133, International Monetary Fund.
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    Cited by:

    1. Iulian Vasile Popescu, 2013. "Analysis of Central Banks Transparency in Countries on the Road to the European Single Currency," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(5), pages 74-85, October.

    More about this item

    Keywords

    central banking; transparency; financial crises; survey expectations; forecasting;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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