Survey of Models and Indicators of Transparency
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The importance of monetary policy transparency is now largely taken for granted – a far cry from Alan Greenspan’s reported remark after his appointment as Chairman of the Federal Reserve Board in 1988: “I guess I should warn you, if I turn out to be particularly clear, you have probably misunderstood what I said.” CBs around the world now wrestle with how to achieve better, rather than just more, transparency. This chapter investigates the long path followed by CBs, practitioners, and academics away from a position of opaque talk, towards transparency in monetary policy. The broad consensus that transparency is an integral part of a sound governance framework for CBs reflects the understanding that the success of monetary policy also depends on how the CB communicates its objectives, adopted measures, and achieved results to the public. Accurate and frequent communication is expected to enhance CBs’ credibility and the confidence of the private sector over time. Hence, transparency is a necessary complement to independence.
KeywordsMonetary Policy Central Bank Economic Forecast Central Bank Independence Inflation Forecast
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