This paper studies the macroeconomic effects of central bank forward guidance when central bank credibility is endogenous. In particular, we take a stylized New Keynesian model with an occasionally binding zero lower bound constraint on nominal interest rates and heterogeneous and boundedly...

We ask whether recent changes in monetary policy due to the financial crisis will be temporary or permanent. We present evidence from two surveys — one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted...