Skip to main content
Article thumbnail
Location of Repository

Political Pressures and Monetary Mystique

By Petra M. Geraats

Abstract

Central bank independence and transparency have become best practice in monetary policy. This paper cautions that transparency about economic information may not be beneficial in the absence of central bank independence. The reason is that it reduces monetary uncertainty, which could make the government less inhibited to interfere with monetary policy. In fact, a central bank could use monetary mystique to obtain greater insulation from political pressures, even if the government faces no direct cost of overriding. As a result, economic secrecy could be beneficial and provide the central bank greater political independence

Topics: Classification-JEL: E58, E52, D82, Transparency, monetary policy, political pressures
Publisher: Faculty of Economics
Year: 2006
OAI identifier: oai:www.repository.cam.ac.uk:1810/131585
Provided by: Apollo

Suggested articles


To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.