Monetary Policy Committee Transparency: Measurement, Determinants, and Economic Effects

34 Pages Posted: 3 Feb 2014

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Ummad Mazhar

Université Libre de Bruxelles (ULB)

Date Written: September 28, 2011

Abstract

This paper studies monetary policy committee transparency (MPCT) based on a new index that measures central bankers’ educational and professional backgrounds as disclosed through central bank websites. Based on a novel cross-sectional data set covering 75 central banks, we investigate the determinants of MPCT as well as its economic consequences. We find that past inflation, quality of institutional setup, and extent of Internet use in a country are important determinants of MPCT. MPCT has a robust and significantly negative impact on inflation variability, even after controlling for important macroeconomic variables and institutional transparency, as well as instrumenting MPCT in various ways.

Keywords: Monetary Policy Committee, Transparency, Monetary Policy Transparency, Monetary Policy, Central Banks

JEL Classification: E52, E58, D12, D83

Suggested Citation

Hayo, Bernd and Mazhar, Ummad, Monetary Policy Committee Transparency: Measurement, Determinants, and Economic Effects (September 28, 2011). Available at SSRN: https://ssrn.com/abstract=2389625 or http://dx.doi.org/10.2139/ssrn.2389625

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universitaetsstr. 24
Marburg, D-35032
Germany
++49(0)6421-28-23091 (Phone)
++49(0)6421-28-23193 (Fax)

Ummad Mazhar

Université Libre de Bruxelles (ULB) ( email )

CP 132 Av FD Roosevelt 50
Brussels, Brussels 1050
Belgium

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