Does monetary policy transparency reduce disinflation costs?

Georgios Chortareas, David Stasavage, Gabriel Sterne

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish (US)
Pages (from-to)521-540
Number of pages20
JournalManchester School
Issue number5
StatePublished - Sep 2003

ASJC Scopus subject areas

  • Economics and Econometrics


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