Journal of Economics and Finance

, Volume 26, Issue 2, pp 150–161 | Cite as

Central bank transparency and market efficiency: An econometric analysis

  • Matthew Rafferty
  • Marc Tomljanovich


Blinder (1998) argues that more open public disclosure of central bank policies may enhance the efficiency of markets. We examine this claim by studying whether the Federal Reserve System's 1994 policy shift toward more open disclosure improved or worsened the predictability of financial markets. Employing methods analogous to Campbell and Shiller (1991), we find that since 1994, the forecasting error has decreased for interest rates on U.S. bonds of most maturity lengths, and that the expectations hypothesis has performed better at the low end of the yield curve. These findings are inconsistent with the view that increased central bank transparency will decrease the efficiency of financial markets.


Interest Rate Root Mean Square Error Monetary Policy Financial Market Federal Reserve 
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Copyright information

© Springer 2002

Authors and Affiliations

  • Matthew Rafferty
    • 1
  • Marc Tomljanovich
    • 2
  1. 1.Quinnipiac UniversityHamdon
  2. 2.Department of EconomicsColgate UniversityHamilton

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