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Does central bank transparency converge across the world? Evidence from a club convergence perspective

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  • Sethi, Dinabandhu
  • Sharma, Ujjwal
  • Meher, Alekha

Abstract

We study whether there is any evidence of convergence of central bank transparency in 112 countries from 1998 to 2019 using Phillips and Sul panel club convergence technique. The results don't find evidence of a single club convergence of central bank transparency. Instead, our result reveals four clubs converging to their unique transition path. Further, we found that countries with high financial depth, trade openness, central bank independence, effective government, and inflation increase the likelihood of convergence to a higher club 1. Our findings have policy implications for central bankers and developing economies struggling with low transparency.

Suggested Citation

  • Sethi, Dinabandhu & Sharma, Ujjwal & Meher, Alekha, 2024. "Does central bank transparency converge across the world? Evidence from a club convergence perspective," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324007621
    DOI: 10.1016/j.frl.2024.105732
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    More about this item

    Keywords

    Monetary policy; Central bank transparency; Club convergence; Panel data model;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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