Please use this identifier to cite or link to this item:
Jensen, Henrik
Year of Publication: 
Series/Report no.: 
EPRU Working Paper Series 2001-01
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.
Document Type: 
Working Paper

Files in This Item:
276.31 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.