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

Winkler, Bernhard, Which Kind of Transparency? On the Need for Clarity in Monetary Policy-Making (August 2000). Available at SSRN: https://ssrn.com/abstract=355587 or http://dx.doi.org/10.2139/ssrn.355587

Bernhard Winkler (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0049 69 1344 6000 (Fax)