A BEJM Topics article.

Abstract

Transparency has become one of the key features of monetary policy. This paper analyzes the reputational incentives related to transparency, focusing on the publication of central bank forecasts. A simple dynamic monetary policy game shows how transparency reduces inflation, as has been found empirically. Furthermore, the endogenous choice of transparency is analyzed. Although transparency exposes weak central banks, the negative market feedback in response to secrecy could provide a sufficiently strong inducement to become transparent. Thus, reputational concerns could lead to transparency, even without formal disclosure requirements.

Submitted: November 4, 2004 · Accepted: January 29, 2005 · Published: February 1, 2005

Originally published in Topics in Macroeconomics.

Recommended Citation

Geraats, Petra M. (2005) "Transparency and Reputation: The Publication of Central Bank Forecasts," Topics in Macroeconomics: Vol. 5 : Iss. 1, Article 1.
Available at: http://www.bepress.com/bejm/topics/vol5/iss1/art1