A parsimonious model of shifting policy regimes can simultaneously capture expected and actual US inflation during 1969 …. Private sector learning about policymaker type leads to a reputation state variable. We use model inflation forecasting rules … to extract state variables from SPF inflation forecasts. US inflation is tracked by optimal policy without commitment …

more, and somewhat faster, with perfect credibility in the wake of the inflation surge post-COVID-19 …This paper studies the effectiveness of forward guidance when central banks have imperfect credibility. Exploiting … unique survey-based measures of expected inflation, output growth, and interest rates, we estimate a small-scale New …

price stability. The benefits of credibility (private inflation expectations coinciding with the inflation target) are … discussed. Credibility improves the tradeoff between inflation variability, output-gap variability and instrument variability … inflation (with base drift in the price level) and price-level stability (without such base drift) are compared, and a suitable …

people observe low inflation, they raise the possibility that the policymaker is committed to low inflation (type 1). This … equilibrium the policymaker of type 1 delivers surprisingly low inflation -- with corresponding costs to the economy -- over an … extended interval. The type 2 person mimics this outcome for awhile, but shift seventually to high inflation. This high …

A new measure of credibility is constructed as a function of the differential between observed inflation and some … estimate of the inflation rate that the central bank targets. The target is assumed to be met flexibly. Credibility is … credibility. Similarly, real economic growth has a significant influence on central bank credibility even in inflation targeting …

This paper studies the implications of central bank credibility for long-run inflation and inflation dynamics. We … competitive firms. Inflation is driven by the interaction of lack of commitment and the economic environment. We show that long …-run inflation increases following an unanticipated permanent increase in the labor wedge or decrease in the elasticity of …

The rise, fall, and stabilization of US inflation between 1969 and 2005 is consistent with a model of shifting policy … sector learning about policymaker type. Using model-implied inflation forecasting rules to extract state variables from the … inflation forecasts in the Survey of Professional Forecasters, we provide evidence that policy regimes without commitment …

restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating …

Central bank credibility plays a pivotal role in much of the modern literature on monetary policy, yet it is difficult … important issues: why credibility matters, and how credibility can be built. The central bankers' answers are compared with the …

patient bank with sufficiently low average inflation bias will always choose minimum transparency. Under discretion, both …