Creating "Credible" Economic Policy in Developing and Transitional Economies

The criterion of "credibility" is invoked today as a means of privileging neoliberal economic policies and independent monetary institutions, namely, autonomous central banks. The paper argues that the credibility criterion presents a formidable obstacle to dissent and to open debate over the feasibility of alternative economic policies and monetary institutions. The paper concludes by suggesting two alternative criteria by which economic policy regimes and the governance structure of monetary institutions could be adjudicated. These alternative criteria are termed the "principle of democratic credibility" and the "principle of fallibility."