Central bank transparency: another look

Abstract

This article extends the Dincer and Eichengreen (2007) index of central bank transparency. Improvements in transparency are notable in Central and Eastern Europe, whereas the index has shown much smaller rises in most other parts of the world. The pattern observed by Dincer and Eichengreen, consistent with a permanent increase in central bank transparency, is also evident in the updated results. The dramatic enhancements in central bank transparency reported earlier appear to be a feature of the late 1990s and the early 2000s. Whether the subsequent data reflect limits to central banks' transparency or, to some extent, transparency ‘fatigue’ is unclear.

Acknowledgements

I am grateful to Princeton University, where I was a Visiting Scholar, to the University of Otago, Dunedin, New Zealand, where I was Williams Evans Visiting Fellow, and to the University of Tasmania, where I was a Visiting Scholar, where portions of this article were written. This research was also supported by an International Opportunities Research Fund Grant from the Social Sciences and Humanities Research Council of Canada. Brady Lavender and Jason Thistlewaite provided excellent research assistance.

Notes

¹I considered extending the data to years prior to 1998 but this was feasible for only a relatively small subset of industrial countries.

²The raw data and accompanying revision notes will eventually be made available on the central bank communication website www.central-bank-communication.net. In some instances that cannot be confirmed, it seems that a very few central banks added information to their website which may have had an impact on the index originally constructed by Dincer and Eichengreen.

³The trade-off between transparency and clarity (see Siklos, 2002, Chapter 6, and references therein) also comes into play here. For example, releasing more information of some kind may improve a country's standing in the race to be transparent but if that information is then seen as reducing clarity a subsequent removal or refinement could well translate into a reduction in the transparency index.

⁴Complete CPI inflation data were not available for 2009.

⁵Transparency increases every year from 1998 with the exception of a small decrease in average total transparency in the Western Hemisphere from 2008 to 2009.