NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Doesn't Society Minimize Central Bank Secrecy?

Karen K. Lewis

NBER Working Paper No. 3397
Issued in July 1990
NBER Program(s):International Trade and Investment, International Finance and Macroeconomics

Societies have incentives to design institutions that allow central bank secrecy. This paper illustrates these incentives in two ways. First, if society tries to constrain secrecy in one way, central bankers will try to regain lost effectiveness by building up secrecy in other ways. Therefore, we may wind up accepting types of secrecy that appear preventable because reducing them would lead to higher costs. Second, if the social trade-offs between policy objectives change over time, the public may directly prefer greater central bank secrecy so that it will be surprised with expansionary policies when it most desires them.

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Document Object Identifier (DOI): 10.3386/w3397

Published: Economic Inquiry, Vol. 29, (1991).pp/ 403-415

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