Transparency and accountability: Empirical models and policy making at the Reserve Bank of New Zealand

Abstract

This paper explains how the performance contract and clear accountability for monetary policy in New Zealand place strong requirements for transparent decision-making based on evidence and analysis. It explores the tension between the requirements of the policy-maker and the constraints from evidence on the economic modeller in the context of the recent development of a Monetary Conditions Index. The paper provides a detailed insight into monetary policy formulation in a central bank.