The implications of central bank transparency for uncertainty and disagreement
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The implications of central bank transparency for uncertainty and disagreement. / Jitmaneeroj, Boonlert; Lamla, Michael J.; Wood, Andrew.
In: Journal of International Money and Finance, Vol. 90, 01.02.2019, p. 222-240.Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - The implications of central bank transparency for uncertainty and disagreement
AU - Jitmaneeroj, Boonlert
AU - Lamla, Michael J.
AU - Wood, Andrew
PY - 2019/2/1
Y1 - 2019/2/1
N2 - Using survey data from 25 economies we provide evidence that greater transparency surrounding monetary policy reduces uncertainty of interest rates and inflation, primarily by reducing uncertainty that is common to agents rather than disagreement between agents. This suggests that studies that focus on disagreement as a proxy for uncertainty understate the benefits of monetary policy transparency. The adoption of inflation targets and forward guidance are both associated with lower uncertainty, although inflation targets have a stronger impact on reducing uncertainty than forward guidance. Moreover, there are diminishing benefits from ever higher levels of transparency. Taken as a whole, our results support the contention that clarity of communication is as important as the magnitude of transparency.
AB - Using survey data from 25 economies we provide evidence that greater transparency surrounding monetary policy reduces uncertainty of interest rates and inflation, primarily by reducing uncertainty that is common to agents rather than disagreement between agents. This suggests that studies that focus on disagreement as a proxy for uncertainty understate the benefits of monetary policy transparency. The adoption of inflation targets and forward guidance are both associated with lower uncertainty, although inflation targets have a stronger impact on reducing uncertainty than forward guidance. Moreover, there are diminishing benefits from ever higher levels of transparency. Taken as a whole, our results support the contention that clarity of communication is as important as the magnitude of transparency.
KW - Economics
KW - Central bank transparency
KW - Disagreement
KW - Monetary policy
KW - Uncertainty
UR - http://www.scopus.com/inward/record.url?scp=85055028208&partnerID=8YFLogxK
U2 - 10.1016/j.jimonfin.2018.10.002
DO - 10.1016/j.jimonfin.2018.10.002
M3 - Journal articles
AN - SCOPUS:85055028208
VL - 90
SP - 222
EP - 240
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
SN - 0261-5606
ER -