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Is transparency about central bank plans desirable?

Sibert, Anne (2009) Is transparency about central bank plans desirable? Journal of the European Economic Association 7 (4), pp. 831-857. ISSN 1542-4766.

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Official URL: http://dx.doi.org/10.1162/JEEA.2009.7.4.831

Abstract

A central bank with private information about its preferences has an incentive to reduce its planned inflation to increase the public's perception of its inflation aversion and lower expected future inflation. A regime is said to be transparent if planned inflation is observable and reveals the central bank's preferences and to be non-transparent if planned inflation is unobservable and can be only imperfectly inferred from actual inflation. A central bank in the non-transparent regime is said to become more transparent when actual inflation becomes a better signal of planned inflation. I find several results about transparent and non-transparent regimes: some are novel and some contrast with the results of earlier papers. In particular, I demonstrate that in a non-transparent regime, increased transparency need not improve the public's ability to infer a central bank's private information. I show that society and central banks are better off with more transparency. My numerical results suggest that society and central banks prefer the transparent to the non-transparent regimes.

Item Type: Article
School or Research Centre: Birkbeck Schools and Research Centres > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
Depositing User: Administrator
Date Deposited: 28 Jan 2011 14:36
Last Modified: 03 Jun 2013 07:13
URI: http://eprints.bbk.ac.uk/id/eprint/1982

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