The paper presents estimates of a model of the credibility of the U.K. commitment to its central parity against the … deutsche mark during the period of U.K. ERM membership (1990-92). The measure of credibility used is the long-term interest … differential with Germany. Credibility is decomposed into two aspects: an assessment of whether the government was truly committed …

Standard models of policy credibility, defined as the expectation that an announced policy will be carried out …, emphasize the preferences of the policymaker, and the role of tough policies in signalling toughness and raising credibility … credibility of a no-devaluation pledge in subsequent periods. We test this implication on data for the interest rate differential …

This paper examines the credibility of the exchange rate policy pursued by the Belgian monetary authorities of pegging … hypothesis that long-run exchange rate credibility has been attained should be rejected, even though considerable progress has … concludes that long-run exchange rate credibility cannot be rejected from 1990 onwards …

credibility prior to inflation convergence, the sign of the real interest rate differential may be reversed. Developments in … significantly more credible in 1989-90. As improved credibility further limits their monetary autonomy, the Italian authorities will …

Interest rate differentials have been widely used to assess the degree of policy credibility. A problem with this … measure, however, is that the relationship between the differential and credibility varies not only across maturities but also …

The credibility of the exchange rate bands in the Nordic countries during 1987-91 is examined with two tests. The … results suggest that the credibility of Finland’s exchange rate band within a twelve-month horizon could not be rejected … except in the fall of 1991; however, the band lacked credibility within a five-year horizon throughout the period. Denmark …

A common rationale for EMS membership is that it enhances the credibility of a central bank’s commitment to stable … exchange rate bands and the prevalence of capital controls. In our model, capital controls themselves affect credibility … to reconcile the non-zero width of the bands with the credibility-based interpretation of the EMS …