Monetary Policy Transparency: Evidence from Central Bank of Nigeria (CBN)

This paper employs text-mining techniques to analyse the communication strategy of the Central Bank of Nigeria (CBN) during the period 2004-2019. Since the policy communique released after each meeting of the CBN’s monetary policy committee (MPC) represents an important tool of central bank communication, we construct a corpus based on 87 policy communiques with a total of 123, 353 words. Having processed the textual data into a form suitable for analysis, we examined the readability, sentiments, and topics of the policy documents. While the CBN’s communication has increased substantially over the years, implying increased monetary policy transparency; the computed Coleman and Liau readability index shows that the word and sentence structures of the policy communiques have become more complex, thus reducing its readability. In terms of monetary policy sentiments, we find an average net score of -10.5 per cent, reflecting the level of policy uncertainties faced by the MPC over the sample period. In addition, our results indicate that the topics driving the linguistic contents of the communiques were influenced by the Bank’s policy objectives as well as the nature of shocks hitting the economy per period.

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Do monetary policy transparency and central bank communication reduce interest rate disagreement?

Journal of Forecasting ◽

10.1002/for.2631 ◽

2019 ◽

Vol 39 (3) ◽

pp. 368-393

Author(s):

Ruttachai Seelajaroen ◽

Pornanong Budsaratragoon ◽

Boonlert Jitmaneeroj

Keyword(s):

Monetary Policy ◽

Interest Rate ◽

Central Bank ◽

Central Bank Communication ◽

Monetary Policy Transparency

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Monetary Policy Transparency

The Oxford Handbook of Economic and Institutional Transparency ◽

10.1093/oxfordhb/9780199917693.013.0003 ◽

2014 ◽

pp. 67-97

Author(s):

Petra Geraats

Keyword(s):

Monetary Policy ◽

Private Sector ◽

Central Bank ◽

Conceptual Framework ◽

Empirical Evidence ◽

Central Banks ◽

Empirical Measures ◽

Forward Guidance ◽

The World ◽

Monetary Policy Transparency

This chapter examines transparency as a key feature of monetary policymaking by central banks around the world. It begins by presenting a conceptual framework for transparency and reviewing empirical measures, practices, and trends in monetary policy transparency. It then looks at theory regarding macroeconomic transparency as well as relevant empirical evidence. It also considers two ways in which monetary policy has become more transparent: the publication of macroeconomic forecasts and analysis and the disclosure of forward guidance about policy actions. The chapter illustrates how transparency allows the private sector to align its expectations with those of the central bank, making monetary policy more effective in the process.

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The impact of monetary policy transparency on inflation: the case of Ukraine

Banks and Bank Systems ◽

10.21511/bbs.11(4).2016.08 ◽

2016 ◽

Vol 11 (4) ◽

pp. 82-89 ◽

Cited By ~ 3

Author(s):

Serhiy Kozmenko ◽

Taras Savchenko ◽

Alona Zakutniaia

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Information Disclosure ◽

Developed Countries ◽

Jel Classification ◽

Point Of View ◽

Theoretical Point ◽

Data Set ◽

The Impact ◽

Monetary Policy Transparency

This study presents empirical evidence on the impact of monetary policy transparency on inflation. A lot of studies analyzed how monetary policy transparency is entangled with inflation level from a theoretical point of view and came to contradictory results (some studies argued that transparency leads to lower inflation, others concluded that transparency results in higher prices). But this study is different from prior studies. Firstly, it looks at investigated issue empirically. Secondly, it considers for other causes of inflation and employs a panel data set on central bank transparency. Thirdly this paper investigates the issue associated with transparency in Ukraine. The authors find that transparency significantly reduces inflation rates in developed countries, but it is positively associated with inflation in Ukraine. Keywords: central bank, monetary policy transparency, information disclosure, inflation. JEL Classification: E52, E58, E59

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Central Bank Communication and Monetary Policy Predictability under Uncertain Economic Conditions

Journal of Central Banking Theory and Practice ◽

10.2478/jcbtp-2019-0011 ◽

2019 ◽

Vol 8 (2) ◽

pp. 5-32

Author(s):

Jonne O. Lehtimäki ◽

Marianne Palmu

Keyword(s):

Monetary Policy ◽

Financial Crisis ◽

Central Bank ◽

Policy Instrument ◽

Central Banks ◽

Short Term ◽

Policy Makers ◽

The Public ◽

Central Bank Communication ◽

Monetary Policy Transparency

Abstract Modern central banks increasingly value monetary policy transparency, and attempt to build credibility by communicating their decisions to the public. This paper studies whether the communication of central banks can be used to explain upcoming changes in their most important monetary policy instrument, the short-term refinancing rate, and whether the public can trust central bank communication during times of financial crisis. This is done by constructing an indicator to measure the predictability of monetary policy by calculating the median of the policy makers’ official comments. The performance of this indicator is studied with ordered probit methods. The results show that predictability was reached relatively well at central bank level during the financial crisis despite the rapid growth of economic uncertainty, and that communication can be a useful tool for central banks during uncertain times.

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Global Financial Crisis and Its Impact on Russia

Voprosy Ekonomiki ◽

10.32609/0042-8736-2009-1-9-27 ◽

2009 ◽

pp. 9-27 ◽

Cited By ~ 9

Author(s):

A. Kudrin

Keyword(s):

Monetary Policy ◽

Fiscal Policy ◽

Financial Crisis ◽

Central Bank ◽

Global Financial Crisis ◽

Developed Countries ◽

Real Economy ◽

Energy Prices ◽

Russian Government ◽

The Real

The article examines the causes of origin and manifestation of the current global financial crisis and the policies adopted in developed countries in 2007—2008 to deal with it. It considers the effects of the financial crisis on Russia’s economy and monetary policy of the Central Bank in the current conditions as well as the main guidelines for the fiscal policy under different energy prices. The measures for fighting the crisis that the Russian government and the Central Bank use to support the real economy are described.

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Endogeneity of Monetary Policy Reaction Fun~tion: An Experience from Pakistan's Economy

The Pakistan Development Review ◽

10.30541/v30i4iipp.931-941 ◽

1991 ◽

Vol 30 (4II) ◽

pp. 931-941

Author(s):

M. Aynul Hasan ◽

Qazi Masood Ahmed

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Money Supply ◽

Relative Effectiveness ◽

Reaction Function ◽

Standard Result ◽

Policy Variable ◽

Target Values ◽

Monetary Policy Reaction Function ◽

Policy Reaction Function

Monetary policy, in general, refers to those steps taken by the Central Bank to achieve such broader objectives of the economy as growth, employment, external balance and price stability through changes in the money supply, interest rates and credit policies. The money supply thus created by the Central Bank should be in response to the changes in key macroeconomic target variables such as GNP, balance of payments, inflation, internal debt and unemployment. Indeed, a properly estimated monetary policy reaction function can provide useful information regarding such matters as to whether the Central Bank, in fact, has been systematically accommodating to the changes in the target variables. The reaction function can also provide insight into the question as to what should be the relevant indicators of the monetary policy. In addition, as argued by Havrilesky (1967), it may also play a crucial role in the formulation of long-term monetary policy strategy. The other important consideration in the development of a monetary policy reaction function pertains to the endogeneity of the monetary policy. As pointed out by Goldfeld and Blinder (1972), if a policy variable responds to the lagged (or expected) target values, then considering such a policy variable as exogenous would not only introduce the problem of misspecification but will also produce serious biases in the parameters estimated from those models. In particular, if the monetary policy variable happens to be strongly influenced by target variables, then the standard result of the relative effectiveness of the monetary policy vis-a-vis fiscal policy can be questionable on the grounds of reverse causation problem.

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