Does Central Bank Transparency Matter for Inflation: Role of Inflation Targeting

Dinabandhu Sethi (), Debashis Acharya () and U jjwal S harma ()
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Dinabandhu Sethi: Department of Liberal Arts, Indian Institute of Technology Hyderabad, Telangana, India, Postal: Indian Institute of Technology Hyderabad; Kandi; Sangareddy; Telangana;, India
Debashis Acharya: School of Economics, University of Hyderabad, Hyderabad, Telangana, India, Postal: School of Economics; University of Hyderabad; CR Rao Road; Gachibowli; Hyderabad; Telangana;, India
U jjwal S harma: Department of Liberal Arts, Indian Institute of Technology Hyderabad, Telangana, India, Postal: Indian Institute of Technology Hyderabad; Kandi; Sangareddy; Telangana;, India

Journal of Economic Integration, 2024, vol. 39, issue 3, 646-670

Abstract: This paper examines the relationship between central bank transparency and inflation for six inflation targeting (IT) and ten non-inflation targeting (non-IT) Asian economies. The propensity score matching and panel regression model are employed in the study. The empirical analysis shows that IT enhances central bank transparency. Further, we find that central bank transparency in IT significantly lowers inflation, suggesting that countries promoting greater monetary policy transparency can have a better advantage of experiencing low inflation. Our findings have policy implications for central banks in developing economies that are grappling with low transparency.

Keywords: monetary policy; inflation targeting; central bank transparency; inflation; panel data model (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 E61 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0915

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