Forecast Transparency and Inflation Volatility: Empirical Evidence from Developing Countries

Ummad Mazhar () and Cheick Kader M’baye ()
Additional contact information
Cheick Kader M’baye: African Management Institute, Bamako, Mali

Global Economy Journal (GEJ), 2016, vol. 16, issue 4, 769-787

Abstract: The desirability of transparency in its varied aspects is not always certain particularly for developing countries. This paper empirically investigates the link between forecast transparency and inflation volatility in a relatively homogenous sample of 41 developing economies over 1998–2007. It classifies central banks into transparent and opaque groups on the basis of their forecast transparency. The differential effect of the forecast transparency is then estimated both at a point in time and over time while controlling for the relevant factors. The main finding of the paper is that forecast transparency stabilizes inflation. In addition, we find that the stabilizing effect of disclosing numerical forecasts gets stronger over time supporting the theoretical insight that forecast transparency allows reputational externalities, and minimizes the likelihood of policy inconsistency. The results are robust against different specifications of the empirical model.

Keywords: transparency; monetary policy; central bank forecasts; inflation volatility (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/abs/10.1515/GEJ-2016-0060
Access to full text is restricted to subscribers

Related works:
Journal Article: Forecast Transparency and Inflation Volatility: Empirical Evidence from Developing Countries (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:gejxxx:v:16:y:2016:i:04:n:gej-2016-0060

Ordering information: This journal article can be ordered from

DOI: 10.1515/GEJ-2016-0060

Access Statistics for this article

Global Economy Journal (GEJ) is currently edited by Joseph Pelzman

More articles in Global Economy Journal (GEJ) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().