Central bank transparency crucial for stabilizing inflation during economic shocks
Excessive inflation can happen when people don't trust the central bank. This study says that even if the central bank is trusted, it might still choose to print more money when prices go up, if it's not clear how well its tools work. How much the central bank tells us about its plans affects how well it can control inflation when prices rise. Being open about its actions is important for the central bank to do its job well.