2017
DOI: 10.2139/ssrn.2962259
|View full text |Cite
|
Sign up to set email alerts
|

Credibility and Monetary Policy

Abstract: This paper revisits the ability of central banks to manage private sector's expectations depending on its credibility and how this affects the use of interest rate rules and pegs to achieve monetary policy objectives. When private agents can only provide limited incentives for the central bank to follow a policy, we show that resulting limited credibility allows a central bank to prevents the inflation from diverging by defaulting on past promises if necessary. As a result, the Taylor rule, when expected, anch… Show more

Help me understand this report

Search citation statements

Order By: Relevance

Paper Sections

Select...
1

Citation Types

0
1
0

Year Published

2019
2019
2019
2019

Publication Types

Select...
1

Relationship

0
1

Authors

Journals

citations
Cited by 1 publication
(1 citation statement)
references
References 51 publications
0
1
0
Order By: Relevance
“…Finally, a credible monetary policy may help reduce expected price and reduce the inflationary effect of government-set fuel price changes (Perrier & Amano, 2000). By credible it means that the central bank and the government in general are believed to actually carry out their stated plans.…”
Section: Introductionmentioning
confidence: 99%
“…Finally, a credible monetary policy may help reduce expected price and reduce the inflationary effect of government-set fuel price changes (Perrier & Amano, 2000). By credible it means that the central bank and the government in general are believed to actually carry out their stated plans.…”
Section: Introductionmentioning
confidence: 99%