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Trends in Monetary Policy Transparency

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  • Petra M. Geraats

Abstract

Transparency has become a prominent feature of monetary policy as central banks have greatly increased the amount of information they disclose about monetary policy‐making. This paper is the first to systematically analyse transparency trends throughout the world and across monetary policy frameworks. It shows that the most notable change in central bank communications has been the greater prevalence of the publication of macroeconomic forecasts and explanations of monetary policy decisions. The rise in transparency has not been confined to inflation targeters but extends to other monetary policy frameworks, although there are significant differences in information disclosure. Nevertheless, in some respects central banks remain quite opaque, in particular about policy deliberations and policy inclinations. This paper also establishes some stylized facts about the macroeconomic environment. In particular, countries with higher inflation and economic development have undergone larger increases in transparency. Moreover, countries with greater transparency have experienced lower subsequent inflation.

Suggested Citation

  • Petra M. Geraats, 2009. "Trends in Monetary Policy Transparency," International Finance, Wiley Blackwell, vol. 12(2), pages 235-268, August.
    • Handle: RePEc:bla:intfin:v:12:y:2009:i:2:p:235-268
    DOI: 10.1111/j.1468-2362.2009.01239.x
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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