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Does Central Bank Transparency Matter for Inflation: Role of Inflation Targeting

Author

Listed:
  • Sethi, Dinabandhu

    (Department of Liberal Arts, Indian Institute of Technology Hyderabad, Telangana, India)

  • Acharya, Debashis

    (School of Economics, University of Hyderabad, Hyderabad, Telangana, India)

  • S harma, U jjwal

    (Department of Liberal Arts, Indian Institute of Technology Hyderabad, Telangana, India)

Abstract

This paper examines the relationship between central bank transparency and inflation for six inflation targeting (IT) and ten non-inflation targeting (non-IT) Asian economies. The propensity score matching and panel regression model are employed in the study. The empirical analysis shows that IT enhances central bank transparency. Further, we find that central bank transparency in IT significantly lowers inflation, suggesting that countries promoting greater monetary policy transparency can have a better advantage of experiencing low inflation. Our findings have policy implications for central banks in developing economies that are grappling with low transparency.

Suggested Citation

  • Sethi, Dinabandhu & Acharya, Debashis & S harma, U jjwal, 2024. "Does Central Bank Transparency Matter for Inflation: Role of Inflation Targeting," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(3), pages 646-670.
    • Handle: RePEc:ris:integr:0915
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    More about this item

    Keywords

    monetary policy; inflation targeting; central bank transparency; inflation; panel data model;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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