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Monetary policy transparency: transparent about what?
Author(s) -
Thornton Daniel L.
Publication year - 2003
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00363
Subject(s) - transparency (behavior) , economics , monetary policy , assertion , argument (complex analysis) , public economics , inflation (cosmology) , monetary economics , macroeconomics , law , political science , computer science , biochemistry , chemistry , physics , theoretical physics , programming language
This paper puts the issue of monetary policy transparency into a broad economic perspective. In so doing, it narrows the focus from that which frequently appears in this literature. The analysis is predicated on the assertion that the sole economic argument for transparency is policy effectiveness—transparency is desirable if it enhances the effectiveness of policy and is not if it does not. In cases where transparency neither enhances nor impairs the effectiveness of policy, the case for transparency can be argued on non‐economic grounds. This analysis has implications for several policy/transparency issues. Important among these is the assumption in this literature that inflation and output must be viewed by policymakers as substitutes. I suggest that policymakers might generate a better inflation/output outcome if they thought of inflation and output objectives as complements rather than substitutes.