Inflation Targeting, Transparency and Interest Rate Volatility: Ditching 'Monetary Mystique' in the U.K.

Posted: 21 Aug 2001

See all articles by Jagjit S. Chadha

Jagjit S. Chadha

University of St. Andrews - School of Management

Charles Nolan

University of St. Andrews

Abstract

Monetary authorities often seem reluctant to discuss the conduct of monetary policy. There is a concern that greater openness in monetary policy-making may lead to volatility in financial markets, and specifically in interest rates. Although there is very little direct empirical evidence examining this concern, recent changes in the monetary policy framework of the U.K. provide an opportunity to gain some insight. Interestingly, the evidence suggests that even though volatility has indeed risen in the recent past in the U.K., there is no evidence that this volatility is directly attributable to increased information flows per se.

Suggested Citation

Chadha, Jagjit S. and Nolan, Charles, Inflation Targeting, Transparency and Interest Rate Volatility: Ditching 'Monetary Mystique' in the U.K.. Journal of Macroeconomics, Vol. 23, No. 3, Summer 2001. Available at SSRN: https://ssrn.com/abstract=259520

Jagjit S. Chadha (Contact Author)

University of St. Andrews - School of Management ( email )

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Charles Nolan

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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