Transparency, democratic accountability, and the economic consequences of monetary institutions

Research output: Contribution to journalArticlepeer-review


Debates about the appropriate mix between autonomy and accountability of bureaucrats are relevant to numerous areas of government action. I examine whether there is evidence of a tradeoff between transparency, democratic accountability, and the gains from monetary delegation. I begin by presenting a simple theoretical model which suggests that central banks that are transparent, in the sense of publishing their macroeconomic forecasts, will find it easier to acquire a reputation. Despite making central banks more subject to outside scrutiny then, monetary transparency can lead to improved economic outcomes. I also consider arguments about the effect of accountability provisions involving parliamentary oversight and control over central bankers. The article then uses a new data set to examine these issues empirically, focusing on a natural experiment involving disinflation costs under different central banking institutions during the 1990s. Results suggest that countries with more transparent central banks face lower costs of disinflation while accountability provisions have no clear effect on disinflation costs. My results also concord with earlier findings that the effect of monetary institutions is conditional on other features of the political environment.

Original languageEnglish (US)
Pages (from-to)389-402
Number of pages14
JournalAmerican Journal of Political Science
Issue number3
StatePublished - Jul 2003

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations


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