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Does Central Bank Transparency and Communication Affect Financial and Macroeconomic Forecasts?

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Issue 2017-12
Pages 60
JEL classification C23, C53, E37, E58, D8
Keywords Central bank transparency, central bank communication, central bank independence, inflation targeting, forward guidance, macroeconomic forecasts, financial forecasts, panel data models with truncated data
Year 2017

  • Does Central Bank Transparency and Communication Affect Financial and Macroeconomic Forecasts?
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In a large sample of countries across different geographic regions and over a long period of time, we find limited country- and variable-specific effects of central bank transparency on forecast accuracy and their dispersion among a large set of professional forecasts of financial and macroeconomic variables. More communication even increases forecast errors and dispersion.