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 …

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 …

outside these rate-of-return bands can be used as a simple test of exchange rate credibility, under the assumption of …

inflation inertia can emerge: the interaction between lack of credibility of government monetary policy announcements and the …. Lack of credibility is then shown to lead to output losses during a disinflation program. We demonstrate the effects of … during disinflation programs with and without price controls and the influence of credibility problems. We discuss nominal …

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

credibility of the central bank. In contrast, conducting monetary policy with a flexible inflation target rule is likely to …

before 1981 and by optimal policy with commitment afterward. In theory and quantification, the interaction of private sector …