, Deputy Chief Financial Officer, Da Afghanistan Bank (Central Bank of Afghanistan), Afghanistan
, Ph.D., Senior Economist, National Bank of Ukraine, Monetary Policy and Economic Analysis Department, Ukraine
Implementation of inflation targeting strategy by central bank is connected with public announcement of inflation targets and central bank’s obligation to achieve these goals. The main element of the central bank’s communication policy in terms of implementing the inflation targeting strategy is the inflation report. The study offers three methods of assessing the quality of inflation reports: 1) expert method (an evaluation of the inflation reports produced by 15 inflation-targeting central banks considering the following criteria: how convincing the report is judged to be, how users trust the central bank, how decisions on monetary policy are fully argued; how complete the report is and the overall assessment of the report); 2) readability test (Flash index calculation, “target audience” definition); 3) content analysis of inflation reports (by using ABBYY FineReader 9.0, ATLAS.ti 7, QDA Miner Lite software). We find that variables that characterize the quality of the inflation report are closely negatively related to the degree of change in the market participants expec-tations of interest rate. Statistical relationship between the quality of inflation reports and predictability of monetary policy was proved by using STATISTICA 10 package.
Keywords: transparency, inflation report, monetary policy, inflation targeting.
JEL Classification: E52, E58, H50, H60, H70.
Cite as: Barhaq, A. R., Zakutniaia, A. (2017). Central bank transparency: cross-country comprehension (example of inflation reports). Business Ethics and Leadership, 1(2), 47-54. Doi: 10.21272/bel.1(2).47-54.2017
- Cannon, S. (2015). Sentiment of the FOMC: Unscripted. Federal Reserve Bank of Kansas City Economic Review (Fourth Quarter).
- Chub, O.O. (2008). Pidvyshchennia transparentnosti ukrainskykh bankiv v umovakh hlobalizatsii” [Increasing the transparency of Ukrainian banks in the context of globalization]. Finansy, oblik i audit, 166-174.
- Dincer, N.N. & Eichengreen, B. (2014). Central Bank Transparency and Independence: Updates and New Measures. International Journal of Central Banking, 10(1), 189-259.
- Eijffinger, S.C., & Geraats, P.M. (2006). How transparent are central banks? European Journal of Political Economy, 22(1), 1-21.
- Fligstein, N., Brundage, J.S., & Schultz, M. (2014). Why the Federal Reserve Failed to See the Financial Crisis of 2008: The Role of “Macroeconomics” as a Sense Making and Cultural Frame. IRLE Working Paper, 111-114. Retrieved from http://irle.berkeley.edu/workingpapers/111-14.pdf. Accessed 21 June 2017.
- Fracasso, А., Genberg H., Wyplosz, C. (2003). How do central banks write? An Evaluation of Inflation Targeting Central Banks. International Center for Monetary and Banking Studies. Retrieved from http://www.norges-bank.no/Upload/import/konferanser/2003-05-05/data/fracasso.pdf. Accessed 30 March 2017.
- Hansen, S., McMahon, M. & Prat, A. (2014). Transparency and Deliberation within the FOMC: a Computational Linguistics Approach. CEP Discussion Paper, 1276.
- Khubiiev, R.K. (2009). Transparentnost kak faktor konkurentosposobnosty” [Transparency as factor of competitiveness]. In Rossiiskoie priedprinimatielstvo, pp. 44-48. Retrieved from http://www.creativeconomy.ru/articles/5305. Accessed 30 March 2017.
- Litovskikh, A.M. (2006). Transparency and its impact on the banking sector. Izvestiya TRTU.
- Melnyk, K.K. (2010). Transparency as a necessary condition to ensure the effectiveness of central bank communication. Sumy. Problemy i perspektyvy rozvytku bankivskoi systemy Ukrainy, pp. 208-216.
- Quinonez, S. Juan (2015). Inflation Targeting: A Panel Approach. Utah State University. Retrieved from http://digitalcommons.usu.edu/cgi/viewcontent.cgi?article=1693&context=gradreports. Accessed 30 March 2017.
- Romer, C.D. & Romer, D.H. (2004). A New Measure of Monetary Shocks: Derivation and Implications. The American Economic Review, 94(4),1055-1084.
- Schonhardt-Bailey, C. (2013). Deliberating American Monetary Policy: A Textual Analysis. Cambridge, MA: The MIT Press.
- Siklos, P.L. (2002). Assessing the Impact of Changes in Transparency and Accountability at the Bank of Canada. Canadian Public Policy. Analyse de Politiques, 279-299.
- Stasavage, D. (2003). Transparency, Democratic Accountability and the Economic Consequences of Monetary Institutions. American Journal of Political Science, 47(3), 389-402.