credibility). We then use panel VARs based on both factor models and observed data to ascertain the impact of global shocks …, financial shocks, trade shocks and credibility shocks on the EMEs versus the AEs.We find that although some EMEs did maintain … resilience to shocks and in the quality of their governance. Moreover it appears that CB credibility in EMEs was more fragile …

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 and central banks with strong institutional feaures tend to do better when hit by a shock of the magnitude of the 2007 …