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

Bernd Hayo and Ummad Mazhar ()

Open Economies Review, 2014, vol. 25, issue 4, 739-770

Abstract: 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, institutional indicators, and monetary policy strategy are important determinants of MPCT. MPCT has a robust and significantly negative impact on inflation variability and inflation expectations, even after controlling for important macroeconomic variables and institutional transparency, as well as instrumenting MPCT in various ways. MPCT can be both a complement to and a substitute for institutional transparency. Copyright Springer Science+Business Media New York 2014

Keywords: Monetary policy committee; Transparency; Monetary policy transparency; Monetary policy; Central banks; E52; E58 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Monetary Policy Committee Transparency: Measurement,Determinants, and Economic Effects (2011)
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DOI: 10.1007/s11079-013-9296-2

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