A Theory of Central Bank Accountability

Sylvester Eijffinger (), Marco Hoeberichts () and Eric Schaling ()

No 2354, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper we investigate central bank accountability by looking at the effect of transparency in a simple monetary policy game with an overriding mechanism. Monetary policy is transparent if there is little uncertainty about the central banker's preferences for inflation stabilization relative to output stabilization. Transparency enhances the central bank's accountability. The paper shows that transparency leads to a lower expected rate of inflation and less stabilization of supply shocks.

Keywords: Accountability; Central Banks; Monetary Policy; Transparency (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2000-01
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Working Paper: A theory of Central Bank accountability (1998)
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