We propose a continuous time model of nominal debt and investigate the role of inflation credibility in the potential … punishment of default. With high inflation credibility, which can be interpreted as joining a monetary union or issuing foreign … currency debt, debt is effectively real. By contrast, with low inflation credibility, sovereign debt is nominal and in a debt …

distortion, e.g., underutilization of capacity and real exchange rate misalignment. However, while under imperfect credibility … by imperfect credibility …

We define and study transparency, credibility, and reputation in a model where the central bank's characteristics are … unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more … inflationary policy than a high-credibility bank, in the sense that it induces higher inflation, but a less expansionary policy in …

. Inflation targets may on average be exceeded, and they may have imperfect credibility, but they may usefully reduce inflation …

A simple test of inflation target credibility is constructed by subtracting the maximum and minimum inflation rates …, fall outside the range of target- consistent real yields, credibility is rejected. Two concepts of credibility, called … absolute credibility and credibility in expectation, are distinguished. The inflation targets of Canada, New Zealand and Sweden …

This paper presents a theory of the real effects of disinflation. As in New Keynesian models, price adjustment is … staggered across firms, As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised … disinflation. The combination of imperfect credibility and staggering yields more plausible results than either of these …

Do existing theories of stabilization help understand the credibility issues involved in such programs? The experience … traditional modeling of credibility. The first sections deals with stabilization as a one shot problem. This approach is used to … ask what "credibility might mean in a world where it is inconceivable that a program will succeed with probability 1. A …