A Research Of Monetary Policy Transparency: Based On The Goal Of Improving Monetary Policy Credibility

Credibility of monetary policy refers the degree of public's trust to the information that central bank announced, and it is generally considered that high credibility of monetary policy will help to stabilize the low inflation at the minimize cost .In the current economic situation of china, inflationary pressure is relatively large. Raising the credibility of the central bank's monetary policy can reduce the anti-inflationary cost of central bank. It can be seen that improving the credibility of monetary policy is important. Some researches indicate that transparency of monetary policy has a major influence on the credibility of monetary policy,and has a decisive role in improving credibility of monetary policy.Transparency of monetary policy is the situation that asymmetric information does not exist between monetary policy makers and the private sector. Comparing with the early period, the transparency of the modern central bank has a huge increase. In recent years, many central banks develop in the direction of more transparent. The central bank appears more transparency in the monetary policy objectives, decision-making process, theory, models and data, etc. Is the improvement in transparency of monetary policy has the expected results in improving the credibility of monetary policy? What kind of features does these countries that with high transparency of monetary policy have? How does the situation in China? Does it need to improve? How to improve? These are the focus of this article.This paper studies the above questions from the theoretical and empirical aspects .This text elaborates on the basic theory of monetary policy transparency and credibility systematically in theoretical, analysis the relationship between transparency and credibility of monetary policy based on "information effects"and"Incentive effects". Empirical research is divided into three areas. The first empirical study analyses the practice of monetary policy transparency to Federal Reserve, Bank of England and European Central bank. Then this test described the empirical evidences of monetary policy transparency in improving the credibility of monetary policy. Through the analysis, this paper finds empirical evidence that increased transparency of monetary policy will help improve monetary policy credibility, and the enhancement in transparency of monetary policy have achieved the desired effect in improving the credibility of monetary policy. The second empirical study is about the determinants of transparency of monetary policy. Using panel data of 18 countries, this paper regress monetary policy transparency on the economic and political determinants .The results show that transparency of monetary policy positively related to per capita income, history inflation, political stability, government efficiency, supervisor and the rule of law. And monetary policy transparency has a negative correlation with financial deepening and the public voice. The third empirical research is about the measurement of China's transparency of monetary policy, the author measure china's transparency index using E&G Method. It shows that china's transparency towards the direction of greater transparency. China's central bank's monetary policy show a increasing trend in the overall level of transparency, but China's overall transparency index level is lower compared with developed countries. By comparing the practice of monetary policy transparency home and abroad, this paper finds out the reasons why China's central bank transparency is lower. China's political transparency,economic transparency,procedure transparency and operations transparency were lower than the foreign central banks ,but policy transparency slightly higher than the policy of transparency.Finally, basing on the international experience and international comparison , this test analysis the reasons why China's transparency in monetary policy is low .Then, combined with the research of full test, this paper put forward some advance to enhance China's transparency of monetary policy from the external environment and internal communication mechanisms aspect.