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Does monetary policy transparency reduce disinflation costs?

Chortareas, Georgios, Stasavage, David and Sterne, Gabriel (2003) Does monetary policy transparency reduce disinflation costs? The Manchester School, 71 (5). pp. 521-540. ISSN 1467-9957

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We examine the relationship between central bank transparency and the costs of disinflation. We provide a model where disinflation efforts imply a higher sacrifice ratio when the public is not fully convinced about the central bank’s resolve to reduce inflation and show that information dissemination by the central bank can remedy this problem. To assess the empirical implications we estimate sacrifice ratios based on individual estimates of Phillips curves in 21 OECD economies. Using transparency indices pertaining to both the detail with which central banks publish forecasts and the means by which policy decisions are explained, we find that a higher degree of central bank transparency is associated with lower sacrifice ratios. This result is robust to alternative estimation methods and periods considered.

Item Type: Article
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Additional Information: This is an electronic version of an Article published in The Manchester School 71(5) pp. 521-540 © 2003 Blackwell Publishing. LSE has developed LSE Research Online so that users may access research output of the School. Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL ( of the LSE Research Online website. A persistent link to the article is available at
Library of Congress subject classification: J Political Science > JA Political science (General)
Date Deposited: 06 Jul 2006

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