Abstract
This study presents empirical evidence on the impact of monetary policy transparency on inflation. A lot of studies analyzed how monetary policy transparency is entangled with inflation level from a theoretical point of view and came to contradictory results (some studies argued that transparency leads to lower inflation, others concluded that transparency results in higher prices). But this study is different from prior studies. Firstly, it looks at investigated issue empirically. Secondly, it considers for other causes of inflation and employs a panel data set on central bank transparency. Thirdly this paper investigates the issue associated with transparency in Ukraine. The authors find that transparency significantly reduces inflation rates in developed countries, but it is positively associated with inflation in Ukraine. Keywords: central bank, monetary policy transparency, information disclosure, inflation. JEL Classification: E52, E58, E59
Highlights
Central banks used to be known for their secrecy, leaving people to guess their intentions
Based on the analysis of the relevant economic literature, we have found out the absence of common approach to determination links between central bank transparency and inflation
There is a multitude of studies saying that central bank transparency is not always advantageous for maintaining price stability
Summary
Central banks used to be known for their secrecy, leaving people to guess their intentions. Nowadays, most central banks announce their objectives with quantitative targets and publish numerical macroeconomic forecasts. They have become much more open about their policy decisions and several ones even give explicit guidance about upcoming policy moves. The key advantage of this strategy is that monetary policy is guided by a simple, logical criterion: the gap between forecasted and target inflation. Serhiy Kozmenko, Dr, Professor of Department of Banking, Kharkiv National University of Economics, Ukraine. Taras Savchenko, Dr, Professor, Head of the Chair of Accounting and Taxation, Education and research Institute for business technologies «UAB», Sumy State University, Ukraine. Alona Zakutniaia, Assistant of the Chair of Finance, Banking and Insurance, Education and research Institute for business technologies «UAB», Sumy State University, Ukraine
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