Working Paper

Central bank secrecy and money surprises: international evidence

Abstract: The information value of central bank announcements of projected future money growth is shown to depend both on the accuracy of the announcements and the extent to which the announcements themselves are anticipated by the public. We construct a new data set on internal Federal Reserve money projections. These projections, which are kept secret while they are in force, are comparable in many important respects with publicly announced Bank of Japan money projections. Using a derivative of the law of iterated projections, we estimate the information value of disclosure on the part of the Bank of Japan and the cost of secrecy on the part of the Federal Reserve. We find that the value of the information provided by the Bank of Japan has been small in terms of reducing money surprises, but that disclosure by the Federal Reserve would have significantly reduced money surprises in the U.S. (Revision of Working papers 90-05 and 89-02)

Keywords: Monetary policy - United States; Monetary policy; Banks and banking, Central;

Status: Published in Review of Economics and Statistics (February 1992, p. 135-145)

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Working Papers in Applied Economic Theory

Publication Date: 1991

Number: 91-01