A Theory of Central Bank Accountability

S.C.W. Eijffinger, M.M. Hoeberichts, E. Schaling

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper develops a theory of central bank accountability. Two aspects of accountability are considered. The first one is transparency of actual monetary policy, the second aspect is the question of who bears final responsibility for monetary policy. Monetary policy is transparent if there is little uncertainty about the central bankers preferences. Transparency enhances the central bank’s accountability. Another way to make the central bank accountable is to shift final responsibility for monetary policy in the direction of the government. This can be achieved by making the cost of overriding the central bank lower. The paper shows that accountability through transparency leads to a lower expected rate of inflation and less stabilization of supply shocks. Accountability through shifting final responsibility in the direction of the government leads to higher inflationary expectations and more stabilization of supply shocks.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages17
Volume1998-103
Publication statusPublished - 1998

Publication series

NameCentER Discussion Paper
Volume1998-103

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Central bank
Accountability
Monetary policy
Responsibility
Transparency
Supply shocks
Government
Stabilization
Uncertainty
Bankers
Inflation
Costs

Keywords

  • monetary policy
  • central banks
  • transparency
  • accountability

Cite this

Eijffinger, S. C. W., Hoeberichts, M. M., & Schaling, E. (1998). A Theory of Central Bank Accountability. (CentER Discussion Paper; Vol. 1998-103). Tilburg: Macroeconomics.
Eijffinger, S.C.W. ; Hoeberichts, M.M. ; Schaling, E. / A Theory of Central Bank Accountability. Tilburg : Macroeconomics, 1998. (CentER Discussion Paper).
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Eijffinger, SCW, Hoeberichts, MM & Schaling, E 1998 'A Theory of Central Bank Accountability' CentER Discussion Paper, vol. 1998-103, Macroeconomics, Tilburg.

A Theory of Central Bank Accountability. / Eijffinger, S.C.W.; Hoeberichts, M.M.; Schaling, E.

Tilburg : Macroeconomics, 1998. (CentER Discussion Paper; Vol. 1998-103).

Research output: Working paperDiscussion paperOther research output

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Eijffinger SCW, Hoeberichts MM, Schaling E. A Theory of Central Bank Accountability. Tilburg: Macroeconomics. 1998. (CentER Discussion Paper).