Central Bank Communication and Output Stabilization

Posted: 27 Mar 2009

See all articles by Marco Hoeberichts

Marco Hoeberichts

De Nederlandsche Bank - Research Department

M. F. Tesfaselassie

affiliation not provided to SSRN

Sylvester C. W. Eijffinger

Tilburg University (CentER) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2009

Abstract

Central banks around the world have a reputation for being secretive about their operations and market assessments. It is sometimes argued that central banks need flexibility and therefore cannot be fully transparent. We find that this explanation does not carry through in a forward-looking New Keynesian framework, where transparency about the central bank's forecasting procedures improves output stabilization. We also show that higher transparency increases optimal conservatism, as the benefits from higher transparency in terms of output stabilization are greater the more conservative is the central bank.

JEL Classification: D83, E52, E58

Suggested Citation

Hoeberichts, Marco M. and tesfaselassie, mewael F. and Eijffinger, Sylvester C. W., Central Bank Communication and Output Stabilization (April 2009). Oxford Economic Papers, Vol. 61, Issue 2, pp. 395-411, 2009. Available at SSRN: https://ssrn.com/abstract=1369068 or http://dx.doi.org/gpn023

Marco M. Hoeberichts (Contact Author)

De Nederlandsche Bank - Research Department ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands
+31-20-524 2890 (Phone)
+31-20-524 2529 (Fax)

Mewael F. Tesfaselassie

affiliation not provided to SSRN ( email )

Sylvester C. W. Eijffinger

Tilburg University (CentER) - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2411 (Phone)
+31 13 466 3042 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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