Central Bank Transparency: Causes, Consequences and Updates

Nergiz Dincer, Barry Eichengreen

NBER Working Paper No. 14791
Issued in March 2009, Revised in December 2011
NBER Program(s):International Finance and Macroeconomics

We present updated estimates of central bank for 100 countries up through 2006 and use them to analyze both the determinants and consequences of monetary policy transparency in an integrated econometric framework. We establish that there has been significant movement in the direction of greater central bank transparency in recent years. Transparent monetary policy arrangements are more likely in countries with strong and stable political institutions. They are more likely in democracies, with their culture of transparency. Using these political determinants as instruments for transparency, we show that more transparency monetary policy operating procedures is associated with less inflation variability though not also with less inflation persistence.

A non-technical summary of this paper is available in the June 2009 NBER Digest.  You can sign up to receive the NBER Digest by email.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w14791

Published: Theoretical Inquiries in Law. Volume 11, Issue 1, Pages 75–123, ISSN (Online) 1565-3404, DOI: 10.2202/1565-3404.1237, January 2010

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