Actual Versus Perceived Central Bank Transparency: The Case of the European Central Bank
CentER Discussion Paper No. 2007-78
44 Pages Posted: 29 Oct 2007
Date Written: October 2007
Central banks have become more and more transparent about their monetary policy making process. In the central bank transparency literature the distinction between actual and perceived central bank transparency is often lacking. However, as perceptions are crucial for the actions of economic agents this distinction matters. A discrepancy between actual and perceived transparency may exist because of incomplete or incorrect transparency knowledge and other (psychological) factors. Even financial experts, the most important channel through which the central bank can influence the economy, might suffer from misaligned perceptions. We investigate the mismatch between actual and perceived transparency and its relevance by analyzing data of a Dutch household survey on the European Central Bank's transparency. To benefit from higher transparency perceptions the European Central Bank might feel tempted to stress its transparency strengths, but hide its transparency weaknesses.
Keywords: Central bank transparency, Perceptions, Survey, CentERpanel, Behavioral Economics
JEL Classification: D80, E52, E58
Suggested Citation: Suggested Citation