The value of central bank transparency when agents are learning

Michele Berardi, John Duffy

Research output: Contribution to journalArticlepeer-review


We examine the role of central bank transparency when the private sector is modeled as adaptive learners. In our model, transparent policies enable the private sector to adopt correctly specified models of inflation and output while intransparent policies do not. In the former case, the private sector learns the rational expectations equilibrium while in the latter case it learns a restricted perceptions equilibrium. These possibilities arise regardless of whether the central bank operates under commitment or discretion. We provide conditions under which the policy loss from transparency is lower (higher) than under intransparency, allowing us to assess the value of transparency when agents are learning. © 2006 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)9-29
Number of pages20
JournalEuropean Journal of Political Economy
Issue number1
Publication statusPublished - Mar 2007


  • Expectational stability
  • Learning
  • Monetary policy
  • Restricted perceptions
  • Transparency


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