Optimal Degrees of Transparency in Monetary Policymaking
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Optimal Degrees of Transparency in Monetary Policymaking. / Jensen, Henrik.
I: Scandinavian Journal of Economics, Bind 104, Nr. 3, 2002, s. 399-422.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Optimal Degrees of Transparency in Monetary Policymaking
AU - Jensen, Henrik
N1 - JEL Classification: E42, E52, F58
PY - 2002
Y1 - 2002
N2 - According to most academics and policymakers, transparency in monetary policymaking is desirable. I examine this proposition in a small theoretical model emphasizing forward-looking private sector behavior. Transparency makes it easier for price setters to infer the central bank's future policy intentions, thereby making current inflation more responsive to policy actions. This induces the central bank to pay more attention to inflation rather than output gap stabilization. Then, transparency may be disadvantageous. It may actually be a policy-distorting straitjacket if the central bank enjoys low-inflation credibility, and there is need for active monetary stabilization policy
AB - According to most academics and policymakers, transparency in monetary policymaking is desirable. I examine this proposition in a small theoretical model emphasizing forward-looking private sector behavior. Transparency makes it easier for price setters to infer the central bank's future policy intentions, thereby making current inflation more responsive to policy actions. This induces the central bank to pay more attention to inflation rather than output gap stabilization. Then, transparency may be disadvantageous. It may actually be a policy-distorting straitjacket if the central bank enjoys low-inflation credibility, and there is need for active monetary stabilization policy
U2 - 10.1111/1467-9442.00294
DO - 10.1111/1467-9442.00294
M3 - Journal article
VL - 104
SP - 399
EP - 422
JO - Scandinavian Journal of Economics
JF - Scandinavian Journal of Economics
SN - 0347-0520
IS - 3
ER -
ID: 136495