Does it Pay to Be Transparent? International Evidence from Central Bank Forecasts

Bank of England Working Paper No. 143

40 Pages Posted: 11 Dec 2001

See all articles by Georgios E. Chortareas

Georgios E. Chortareas

University of Athens - Faculty of Economics; University of Essex - Department of Accounting, Finance & Management; King's College London

David Stasavage

New York University (NYU)

Gabriel Sterne

Bank of England

Date Written: November 2001

Abstract

Is central bank transparency associated with variation in macroeconomic outcomes? Cross-country data covering 87 countries is used to construct an index for transparency based upon the detail in central banks' published forecasts. After controlling for a number of other institutional and macroeconomic variables it is found that an increase in the detail that central banks include in their published forecasts is associated with lower average inflation. The result holds regardless of whether the domestic nominal anchor is based more on an inflation or money target, but not for exchange rate targeting countries. Furthermore, no evidence is found that the publication of forecasts is associated with greater output volatility.

Keywords: transparency, monetary frameworks, inflation, central banks

JEL Classification: D72, E42, E52, E58

Suggested Citation

Chortareas, Georgios and Stasavage, David and Sterne, Gabriel, Does it Pay to Be Transparent? International Evidence from Central Bank Forecasts (November 2001). Bank of England Working Paper No. 143. Available at SSRN: https://ssrn.com/abstract=293182 or http://dx.doi.org/10.2139/ssrn.293182

Georgios Chortareas (Contact Author)

University of Athens - Faculty of Economics ( email )

8 Pesmazoglou street
GR-10559 Athens
Greece
+(30) 210 3689805 (Phone)
+(30) 210 3689810 (Fax)

University of Essex - Department of Accounting, Finance & Management ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

King's College London ( email )

Strand
London, England WC2R 2LS
United Kingdom

David Stasavage

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Gabriel Sterne

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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