extent to which inflation expectations are formed by the announced targets. As the credibility of the central bank increases … target. Credibility enables expectation to be formed in a forward-looking way by weakening its connection with the past. This … study aims to contribute to the literature concerning the effects of credibility on monetary policy. For this purpose, using …

This paper shows that the credibility gain from permanently committing to a fixed exchange rate by joining the European … credibility a pegged exchange rate regime yields a lower loss compared to an inflation targeting policy, even if this policy … ranking would be reversed in a fullcredibility environment. There exists an initial stock of credibility that must be achieved …

-)establish credibility, optimal monetary policy under discretion is shown to set higher interest rates today if average inflation exceeded … term in the central bank's optimal instrument rule, which we refer to as the credibility loss. Augmenting a standard Taylor … seven central banks and that this influence is economically meaningful. A deteroriation in credibility forces central …

macroeconomic environment. We find that central bank credibility is negatively associated with the level of inflation target …