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.
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.
|School:||Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics|
|Date Deposited:||28 Jan 2011 14:36|
|Last Modified:||03 Jun 2013 07:13|
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