Transparent Monetary Policy

35 Pages Posted: 11 Oct 2007

See all articles by Marc D. Hayford

Marc D. Hayford

Loyola University of Chicago - Department of Economics

A. (Tassos) G. Malliaris

Loyola University Chicago

Date Written: July 10, 2007


In 1994 the Federal Reserve System moved to a more transparent reporting of monetary policy. In this paper we first discuss the evolution of Federal Reserve transparency in U.S. and second we test its effectiveness. We assess the empirical impact of monetary policy transparency on the uncertainty about future monetary policy using T-bill rate forecast dispersions from the Survey of Professional Forecasters as a proxy for monetary policy uncertainty. We use three statistical methodologies: descriptive statistics, single regression equations and a vector autoregressive model. The empirical findings confirm that Federal Reserve transparency has reduced the uncertainty of future monetary policy anticipated by market participants.

Keywords: Transparent, Monetary, Policy

JEL Classification: E44, E52, E58

Suggested Citation

Hayford, Marc D. and Malliaris, A. (Tassos) G., Transparent Monetary Policy (July 10, 2007). Available at SSRN: or

Marc D. Hayford

Loyola University of Chicago - Department of Economics ( email )

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A. (Tassos) G. Malliaris (Contact Author)

Loyola University Chicago ( email )

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Quinlan School of Business
Chicago, IL 60611
United States
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