Central Bank Transparency in Theory and Practice

Andrew Hughes Hallett and Maria Demertzis

No 3639, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the effects of Central Bank transparency on inflation and the output gap. We thus first identify a small analytical model, which concludes that transparency affects the variability of inflation and output and not their average levels. Then we examine whether this conjecture holds empirically, employing the recently derived index of transparency by Eijffinger and Geraats. The em-pirical findings confirm that the averages are not affected by transparency. It does seem to explain however, about 50% of the variability in inflation. The relation between transparency and output volatility is less clear but appears to be positive rather than negative.

Keywords: Central bank; Economic and political transparency; inflation; Output gap performance (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2002-11
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Central Bank Transparency in Theory and Practice (2010)
Journal Article: Central Bank transparency in theory and practice (2007)
Working Paper: Central bank transparency in theory and practice (2004)
Working Paper: Central Bank Transparency in Theory and Practice (2003)
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