A Theory of Central Bank Accountability

22 Pages Posted: 4 May 2001

See all articles by Sylvester C. W. Eijffinger

Sylvester C. W. Eijffinger

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

Marco Hoeberichts

De Nederlandsche Bank - Research Department

Eric Schaling

Rand Afrikaans University - Department of Economics; Bank of England

Multiple version iconThere are 2 versions of this paper

Date Written: January 2000

Abstract

In this paper we investigate central bank accountability by looking at the effect of transparency in a simple monetary policy game with an overriding mechanism. Monetary policy is transparent if there is little uncertainty about the central banker's preferences for inflation stabilization relative to output stabilization. Transparency enhances the central bank's accountability. The paper shows that transparency leads to a lower expected rate of inflation and less stabilization of supply shocks.

Keywords: Accountability, central banks, monetary policy, transparency

JEL Classification: E52, E58

Suggested Citation

Eijffinger, Sylvester C. W. and Hoeberichts, Marco M. and Schaling, Eric, A Theory of Central Bank Accountability (January 2000). CEPR Discussion Paper No. 2354. Available at SSRN: https://ssrn.com/abstract=268858

Sylvester C. W. Eijffinger (Contact Author)

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)

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Munich, DE-81679
Germany

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

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Marco M. Hoeberichts

De Nederlandsche Bank - Research Department ( email )

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

Eric Schaling

Rand Afrikaans University - Department of Economics ( email )

P.O.Box 524
2006 Auckland Park
South Africa
+27 11 489 2927/7068 (Phone)
+27 11 489 3039 (Fax)

Bank of England

Threadneedle Street
London, EC2R 8AH
United Kingdom

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