Title: Central bank transparency under model uncertainty
Description: "This paper explores the effects of central bank transparency on the performance of optimal inflation targeting rules.  I assume that both the central bank and the private sector face uncertainty about the "correct" model of the economy and have to learn.  A transparent central bank can reduce one source of uncertainty for private agents by communicating its policy rule to the public.  The paper shows that central bank transparency plays a crucial role in stabilizing the agents' learning process and expectations.  By contrast, lack of transparency can lead to expectations-driven fluctuations that have destabilizing effects on the economy, even when the central bank has adopted optimal policies"--Federal Reserve Bank of New York web site.
Subjects: Central Banks and banking, Inflation (Finance), Monetary policy