Central Bank Transparency and Financial Market Expectations: The Case of Emerging Markets

Central Bank Transparency and Financial Market Expectations: The Case of Emerging Markets

In this paper, we study how central bank transparency influences the formation of money market expectations in emerging markets. The sample covers 25 countries for the period from January 1998 to December 2009. We find, first, that transparency reduces the bias (the difference between the money m...

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Yayımlandı:MAGKS - Joint Discussion Paper Series in Economics (Band 36-2011)
Yazar: Neuenkirch, Matthias
Materyal Türü: Arbeit
Dil:İngilizce
Baskı/Yayın Bilgisi: Philipps-Universität Marburg 2011
Konular:
Wirtschaft
Emerging Markets
Interest Rates
Central Bank Transparency
Money Market.
Financial Market Expectations
Monetary Policy
Economics
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Özet:In this paper, we study how central bank transparency influences the formation of money market expectations in emerging markets. The sample covers 25 countries for the period from January 1998 to December 2009. We find, first, that transparency reduces the bias (the difference between the money market rate and the weighted expected target rate over the contract period) in money market expectations. The effect is larger for countries with no exchange rate peg and countries with low income. Second, an intermediate level of transparency is found to have the most favorable influence on money market expectations: neither complete secrecy nor complete transparency is optimal. Finally, all subcategories of the Eijffinger and Geraats (2006) index lead to a smaller bias in expectations, with political transparency having the largest effect.
Fiziksel Özellikler:21 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0101

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