The unemployment effect of central bank transparency

Most central banks have increased their transparency in the recent past. The question is whether higher transparency comes at some cost. Firstly, the article shows in a theoretical model that transparency does not necessarily lead to higher unemployment. Secondly, the paper analyses the main theoret...

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Bibliographic Details
Published in:Empirical economics 2020-12, Vol.59 (6), p.2947-2975
Main Author: Weber, Christoph S.
Format: Article
Language:English
Subjects:
Central banks
Econometrics
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Employment
Finance
Insurance
Management
Statistics for Business
Transparency
Unemployment
Wages & salaries
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Summary:Most central banks have increased their transparency in the recent past. The question is whether higher transparency comes at some cost. Firstly, the article shows in a theoretical model that transparency does not necessarily lead to higher unemployment. Secondly, the paper analyses the main theoretical results of other authors that transparency leads to higher wages and unemployment (volatility). The empirical results show no evidence for these conjectures. In fact, the analyses show that transparency can reduce the detrimental effect that central bank independence has on employment. Furthermore, the estimations confirm that transparency does not lead to higher unemployment volatility.
ISSN:0377-7332
1435-8921
DOI:10.1007/s00181-019-01741-1