Political Pressures and Monetary Mystique

Petra Geraats ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Central bank independence and transparency have become best practice in monetary policy. This paper cautions that transparency about economic information may not be beneficial in the absence of central bank independence. The reason is that it reduces monetary uncertainty, which could make the government less inhibited to interfere with monetary policy. In fact, a central bank could use monetary mystique to obtain greater insulation from political pressures, even if the government faces no direct cost of overriding. As a result, economic secrecy could be beneficial and provide the central bank greater political independence.

Keywords: Transparency; monetary policy; political pressures (search for similar items in EconPapers)
JEL-codes: D82 E52 E58 (search for similar items in EconPapers)
Pages: 33
Date: 2005-12
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pol
Note: Ma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Political Pressures and Monetary Mystique (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0557

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