The Mystique of Central Bank Speak

Despite the recent trend toward greater transparency of monetary policy, in many respects mystique still prevails in central bank speak. This paper shows that the resulting perception of ambiguity could be desirable. Under the plausible assumption of imperfect common knowledge about the degree of central bank transparency, economic outcomes are affected by both the actual and perceived degree of transparency. It is shown that actual transparency is beneficial, while it may be useful to create the perception of opacity. The optimal communication strategy for the central bank is to provide clarity about the inflation target and to communicate information about the output target and supply shocks with perceived ambiguity. In this respect, the central bank benefits from sustaining transparency misperceptions, which helps to explain the mystique of central bank speak

The Real (Social) Experience of Monetary Policy

This paper takes a socio-economic approach to considering money in relation to real experience, focusing on the real effects of monetary policy. While most of the economics literature focuses on interest-rate setting as the core tool of monetary policy, we focus here instead on signalling by the central bank as a mechanism for influencing expectations and behaviour in conditions of uncertainty. This involves addressing the social-conventional expectations among different groups (a mechanism for dealing with uncertainty) applied to their particular ways of framing the real and financial sectors. Actual credit conditions faced by borrowers in turn are the outcome of the conventional view among banks as a result of their framing and the influence of central bank signalling. These relations between central banks, banks and the non-bank public in turn normally rest on long-established relations of trust. We consider the real effects of monetary policy in circumstances where trust has broken down

Introducing Instruments of Central Bank Accountability in a Monetary Union

With an increasing number of independent central banks, accountability of central banks is also getting more attention. This paper analyses the possibility of introducing instruments of central bank accountability in a monetary union. In our model, monetary policy is influenced by the governments of the member states according to the degree of independence granted to the central bank. Instruments of democratic accountability are introduced which generate different expected losses for a government. The amount of the expected loss will determine the approval of a government to the implementation of a particular mechanism. We show that the agreement between the governments will only be unanimous for the definition of the inflation target of the central bank. Copyright Springer Science+Business Media, LLC 2007Independence, Accountability, Monetary union, E52, E58,

Should the individual voting records of central bankers be published?

ISSN:0176-1714ISSN:1432-217

Contested meanings of transparency in central banking

Over the last two decades, there have been far-reaching transformations in the ways central banks operate, especially in regard to how openly they communicate with other actors. Transparency in central banking has two quite distinct motivations. The first is to provide a means of holding the central bankers to account, while the second is about the efficiency of their policy-making. These two motivations for transparency reflect contestable norms about the choices central banks make. The paper discusses how transparency in central banking functions and explores how the underlying norms might be open to contestation. A typology showing the rationale for, and effects of, different forms of transparency is constructed and its implications assessed

Fiscal-monetary Interactions: The Effect of Fiscal Restraint and Public Monitoring on Central Bank Credibility

Monetary-fiscal interaction, Reputation, Credibility, Overriding, Monitoring, Central bank independence, Inflation targeting, Transparency, E52, E61, C72,