some parameterizations, there is a low credibility equilibrium (with high expectation of a reset) associated with high …

credibility. Vestin (2006) shows that when the monetary authority cannot commit to future policy, price-level targeting yields … higher welfare than inflation targeting. We revisit this issue by introducing imperfect credibility, which is modeled as …

credibility, changes in the slope of the Phillips curve, and changes in the degree of income stabilization from automatic fiscal … results are with respect to credibility. When monetary credibility increases, the central bank can attain more stable output … and inflation. But increasing credibility is a double-edged sword. To reap its benefits, the central bank must, in general …

credibility. …

by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived … target and the actual target, an increase in credibility is beneficial to the central bank because it brings the policy …-order approximation for reasonable degrees of initial credibility, and may actually be preferable if agents cannot determine the exact …

attaining credibility for their policy objectives. These steps have anchored inflation expectations to the target of the … between credibility and optimal probing. I find that, for plausible parameter values, the optimal amount of probing is small … and varies little with credibility. Only for low levels of credibility or unrealistically large levels of uncertainty or …