Which Kind of Transparency? On the Need for Clarity in Monetary Policy-Making
35 Pages Posted: 7 Jan 2003
Date Written: August 2000
Abstract
In most of the existing academic literature the notion of transparency in monetary policy is defined in too simple terms to be of practical relevance. This paper suggests a conceptual framework, which distinguishes different - and potentially conflicting - aspects of transparency. When there are frictions in communication or imperfections in the processing of information, greater "openness" (i.e. more information) need not always enhance the "clarity" of central bank communication. In this perspective transparency primarily hinges on a shared mode of interpretation ("common understanding") between the central bank and its audience.
Keywords: Transparency, Monetary Policy Strategy, Communication
JEL Classification: E42, E52, E58, F58
Suggested Citation: Suggested Citation
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