What Kind of Transparency?∗

How transparent should a central bank be about (i) its objectives and (ii) its informa-tion on how monetary policy maps into economic outcomes? We consider a version of the Barro-Gordon framework in which monetary policy signals an inflation-biased Bank’s private information on both dimensions. We find that a commitment to trans-parency about how policy affects outcomes is desirable while transparency about ob-jectives need not be. Public uncertainty about a Bank’s inflation or output target can mitigate the Bank’s inability to commit to achieving that target