Volume 12, Issue 3 (Summer 2017)                   J. Mon. Ec. 2017, 12(3): 345-367 | Back to browse issues page

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1- Mazandaran University
2- University of Tehran
3- Mofid University
Abstract:   (1762 Views)
This paper aims to optimize the Central Bank transparency level which corresponds to the minimum of output volatility in 28 states of the Organization of Islamic Cooperation (due to the maximum data availability) during the period 2003-2014. For this purpose, the Dincer-Eichengreen index is used, which includes five aspects covering political, economic, procedural, policy, and operational transparency. The index ranges in numerical value from 0 to 15 with 0 being the most opaque and 15 the most transparent. Applying the Arellano-Bond GMM estimation and using the Dincer-Eichengreen index as a proxy of transparency, the result indicates that an increase in the level of central bank transparency will decrease output volatility up to a certain point, after which additional information from central banks begin to exacerbate it. In addition, the effects of other variables (financial depth, first lag of inflation, oil rents-GDP ratio) on output volatility are positive. Therefore, moving with caution towards monetary policy transparency is recommended as output volatility is reduced considerably, implying significant benefits for output stability.
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Type of Study: Original Research - Theoric | Subject: Monetary Economics
Received: 6 Oct 2018 | Accepted: 23 Sep 2019 | Published: 23 Sep 2019

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