Determinants of monetary policy transparency in selected Middle East countries

Theoretically speaking, monetary policy transparency usually refers to the informational symmetry between the central bank and the private sector. High degrees of transparency reduce uncertainty, improve the private-sector inference about the central bank goals, and increase the effectiveness of monetary policies. Over the last two decades, central banks around the world have taken a variety of steps to enhance monetary policy transparency. Nowadays, most central banks provide regular reports on recent economic and financial conditions, the stance of monetary policies, and the outlook for various goal variables. In addition, most central banks in advanced economies have adopted explicit numerical inflation targets in their conduct of monetary policies, which can be considered as an important aspect of monetary policy transparency. However, this movement toward transparency in Middle East countries has been so blunt. So, in this paper, using the panel data approach, the factors affecting the monetary policy transparency in these countries have been evaluated. The results from six estimated models show the negative and significant effects of the past inflation and positive effect of per capita GDP, financial deepening and openness index enhancement. While government efficiency, as an institutional factor, has been affective on the central bank transparency, other institutional variables have no significant influence.