The effect of central bank transparency on exchange rate volatility

Christoph Weber

Journal of International Money and Finance, 2019, vol. 95, issue C, 165-181

Abstract: The increase in central bank transparency has been one of the main developments in central banking in the past two decades. This leads to the question of the effect of central bank transparency on the volatility of exchange rates. According to theoretical considerations, more information could lead to either more precise forecasts or more noise trading. This raises the need for an empirical estimation of the relationship. The present study shows that the effect of central bank transparency on exchange rate volatility depends on a country’s development. While there is no effect of central bank transparency in the full sample and for developing countries, transparency increases exchange rate fluctuations in developed countries.

Keywords: Central bank transparency; Exchange rate volatility; Monetary policy (search for similar items in EconPapers)
JEL-codes: E24 E42 E58 F31 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: The Effect of Central Bank Transparency on Exchange Rate Volatility (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:95:y:2019:i:c:p:165-181

DOI: 10.1016/j.jimonfin.2019.04.002

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