Central bank communication and output stabilization

S.C.W. Eijffinger, M.M. Hoeberichts, M.F. Tesfaselassie

Research output: Contribution to journalArticleScientificpeer-review

277 Downloads (Pure)

Abstract

Central banks around the world have a reputation for being secretive about their operations and market assessments. It is sometimes argued that central banks need flexibility and therefore cannot be fully transparent. We find that this explanation does not carry through in a forward-looking New Keynesian framework, where transparency about the central bank’s forecasting procedures improves output stabilization. We also show that higher transparency increases optimal conservatism, as the benefits from higher transparency in terms of output stabilization are greater the more conservative is the central bank.
Original languageEnglish
Pages (from-to)395-411
JournalOxford Economic Papers
Volume61
Issue number2
Publication statusPublished - 2009

Fingerprint

Central bank
Central bank communication
Stabilization
Transparency
Conservatism
New Keynesian

Cite this

Eijffinger, S. C. W., Hoeberichts, M. M., & Tesfaselassie, M. F. (2009). Central bank communication and output stabilization. Oxford Economic Papers, 61(2), 395-411.
Eijffinger, S.C.W. ; Hoeberichts, M.M. ; Tesfaselassie, M.F. / Central bank communication and output stabilization. In: Oxford Economic Papers. 2009 ; Vol. 61, No. 2. pp. 395-411.
@article{ea078ea26ec7461f9545629b96f6f768,
title = "Central bank communication and output stabilization",
abstract = "Central banks around the world have a reputation for being secretive about their operations and market assessments. It is sometimes argued that central banks need flexibility and therefore cannot be fully transparent. We find that this explanation does not carry through in a forward-looking New Keynesian framework, where transparency about the central bank’s forecasting procedures improves output stabilization. We also show that higher transparency increases optimal conservatism, as the benefits from higher transparency in terms of output stabilization are greater the more conservative is the central bank.",
author = "S.C.W. Eijffinger and M.M. Hoeberichts and M.F. Tesfaselassie",
year = "2009",
language = "English",
volume = "61",
pages = "395--411",
journal = "Oxford Economic Papers",
issn = "0030-7653",
publisher = "Oxford University Press",
number = "2",

}

Eijffinger, SCW, Hoeberichts, MM & Tesfaselassie, MF 2009, 'Central bank communication and output stabilization', Oxford Economic Papers, vol. 61, no. 2, pp. 395-411.

Central bank communication and output stabilization. / Eijffinger, S.C.W.; Hoeberichts, M.M.; Tesfaselassie, M.F.

In: Oxford Economic Papers, Vol. 61, No. 2, 2009, p. 395-411.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Central bank communication and output stabilization

AU - Eijffinger, S.C.W.

AU - Hoeberichts, M.M.

AU - Tesfaselassie, M.F.

PY - 2009

Y1 - 2009

N2 - Central banks around the world have a reputation for being secretive about their operations and market assessments. It is sometimes argued that central banks need flexibility and therefore cannot be fully transparent. We find that this explanation does not carry through in a forward-looking New Keynesian framework, where transparency about the central bank’s forecasting procedures improves output stabilization. We also show that higher transparency increases optimal conservatism, as the benefits from higher transparency in terms of output stabilization are greater the more conservative is the central bank.

AB - Central banks around the world have a reputation for being secretive about their operations and market assessments. It is sometimes argued that central banks need flexibility and therefore cannot be fully transparent. We find that this explanation does not carry through in a forward-looking New Keynesian framework, where transparency about the central bank’s forecasting procedures improves output stabilization. We also show that higher transparency increases optimal conservatism, as the benefits from higher transparency in terms of output stabilization are greater the more conservative is the central bank.

M3 - Article

VL - 61

SP - 395

EP - 411

JO - Oxford Economic Papers

JF - Oxford Economic Papers

SN - 0030-7653

IS - 2

ER -

Eijffinger SCW, Hoeberichts MM, Tesfaselassie MF. Central bank communication and output stabilization. Oxford Economic Papers. 2009;61(2):395-411.