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Erschienen in: Empirical Economics 6/2020

27.07.2019

The unemployment effect of central bank transparency

verfasst von: Christoph S. Weber

Erschienen in: Empirical Economics | Ausgabe 6/2020

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Abstract

Most central banks have increased their transparency in the recent past. The question is whether higher transparency comes at some cost. Firstly, the article shows in a theoretical model that transparency does not necessarily lead to higher unemployment. Secondly, the paper analyses the main theoretical results of other authors that transparency leads to higher wages and unemployment (volatility). The empirical results show no evidence for these conjectures. In fact, the analyses show that transparency can reduce the detrimental effect that central bank independence has on employment. Furthermore, the estimations confirm that transparency does not lead to higher unemployment volatility.

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Fußnoten
1
A literature review covering all studies analysing the effect of CBT on inflation (volatility) is provided by Weber (2018).
 
2
If we assume that the price level of the previous period is 1, then \(\pi {}\) is not only the log price level of the current period, but at the same also approximately the inflation rate.
 
3
Van der Cruijsen and Eijffinger (2010) provide a thorough literature review on theoretical and empirical studies examining the effects of CBT up to 2008.
 
4
Summary statistics are presented in the Appendix.
 
5
The results of these tests are available in the Appendix.
 
6
The definitions of the different wage measures are available in the Appendix.
 
7
There might be concerns that inflation and unemployment are determined simultaneously which might blur the results presented in Table 2. However, the results are virtually the same when we exclude inflation.
 
8
In the case of the sub-indices, there is no evidence for a nonlinear relationship.
 
9
The studies by Eichler and Littke (2018) and Weber (2019) analyse how CBT affects exchange rate volatility although they come to different results.
 
10
The results of these estimations are available upon request.
 
11
These estimation results are available upon request.
 
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Metadaten
Titel
The unemployment effect of central bank transparency
verfasst von
Christoph S. Weber
Publikationsdatum
27.07.2019
Verlag
Springer Berlin Heidelberg
Erschienen in
Empirical Economics / Ausgabe 6/2020
Print ISSN: 0377-7332
Elektronische ISSN: 1435-8921
DOI
https://doi.org/10.1007/s00181-019-01741-1

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