Macroeconomic effects of central bank transparency: the case of Brazil

Nowadays there is a tendency for central banks to increase transparency in the conduct of monetary policy. Central bank transparency could be defined as the existence of symmetric information between monetary policymakers and other economic agents. High degrees of transparency reduce uncertainty, im...

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Bibliographic Details
Published in:The Cato journal 2008-01, Vol.28 (1), p.117-137
Main Authors: de Mendonca, Helder Ferreira, Filho, Jose Simao
Format: Article
Language:English
Subjects:
Accountability
Brazil
Capital market
Case studies
Central Banks
Committees
Decision making
Disclosure of information (Banking law)
Economic impact
Elections
Financial markets
Forecasts and trends
Foreign exchange rates
Inflation
Influence
Information dissemination
Interest rates
Kurtosis
Macroeconomics
Monetary economics
Monetary policy
Policy making
Politics
Public policy
Securities markets
Services
Stock exchanges
Studies
Transparency
Variables
Volatility
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Summary:Nowadays there is a tendency for central banks to increase transparency in the conduct of monetary policy. Central bank transparency could be defined as the existence of symmetric information between monetary policymakers and other economic agents. High degrees of transparency reduce uncertainty, improve the private-sector inference about central bank goals, and increase the effectiveness of monetary policy. There is now an increasing literature that measures the effects of transparency on average inflation, output volatility (Chortareas, Stasavage, and Sterne 2002), the efficiency of monetary policy (Cecchetti and Krause 2002), and the volatility of financial markets (Ehrmann and Fratzscher 2005). The main objective of this article is to analyze the impact of transparency at the Central Bank of Brazil (CBB) on macroeconomic variables. In particular, this article considers the effect of the CBB's announcements and publications on several variables related to the inflation targeting system, including expectations.
ISSN:0273-3072
1943-3468