Research On The Impact Of Monetary Transparency On Macroeconomic Interior Equilibrium

In most cases, the internal macroeconomic is unbalanced, so that monetarypolicy is needed for achieving the target of anti-inflation and anti-depression.Monetary policy transparency as a complement of the traditional monetary policytools can effectively guide the market’s inflation expectations in order to get themacroeconomic interior equilibrium. This study is about the impact of monetarypolicy transparency on macroeconomic interior equilibrium. Monetary policytransparency as a prerequisite for a forward-looking monetary policy, can correctlyguide inflation expectations. therefore, It is necessary to conduct further research.This paper corrects the Woodford (1999) conservative central bank model byadding inflation expectation as the conduction intermediaries. Then, this paper usespenal data Model to analysis the relationship between monetary policy transparencyand inflation over the period1999-2009for11typical central banks over the world,the results indicate that, monetary policy transparency can reduce inflation-outputvolatility. In addition, the hypothesis of optimal monetary policy transparency hasbeen tested. This paper also uses penal Vector Auto-Regression Model to analysis therelationship between monetary policy transparency and inflation,the results indicatethat, the improvement of monetary policy transparency can significantly influence thelever of inflation in the right direction.Finally, a brief analysis of the current situation of China’s central banktransparency has been done, and some policy recommendations has been put forward.China’s central bank monetary policy transparency lower than the average level ofdeveloped countries, China has to take measures to enhance the level of transparencyand to play the role of inflation expectations management mechanism, in order toestablish a more transparent and efficient monetary policy framework.