The role of central bank transparency for guiding private sector forecasts
Eijffinger,S.C.W. Ehrmann,M. Fratzscher,M.
Eijffinger,S.C.W.
Ehrmann,M.
Fratzscher,M.
Abstract
Central banks have become remarkably more transparent over the last few decades. In this paper, we study the effects of this evolution, focusing on whether enhanced central bank transparency lowers dispersion among professional forecasters of key economic variables. We use a large set of proxies for central-bank transparency in 12 advanced economies. We find evidence for a sizeable effect (e.g., by announcing a quantified inflation objective, or by publishing inflation and output forecasts). However, there are decreasing marginal effects to increases in transparency, and the disagreement among the expectations of the general public is not affected. This suggests that there are possible limits to transparency.
Description
Date
2012
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
SDG 17 - Partnerships for the Goals
Citation
Eijffinger, S C W, Ehrmann, M & Fratzscher, M 2012, 'The role of central bank transparency for guiding private sector forecasts', Scandinavian Journal of Economics, vol. 114, no. 3, pp. 1018-1052. https://doi.org/10.1111/j.1467-9442.2012.01706.x