using existing macroeconomic models by modifying expectations about policy announcements. The main advantage of our method … incorporate information about future interest rate announcements: "inattention", "credibility", "finite planning horizon", and …

stylized New Keynesian model in which agents' inflation expectations are sensitive to inflation deviations from target. To (re …-)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 …

interest rate rule, raising the possibility of inefficient fluctuations due to the dependence of expectations on extraneous … combine forward looking expectations and predetermined variables. We consider a variety of specifications that incorporate …

requirement that the underlying rational expectations equilibrium is locally indeterminate. We suggest ways in which policymakers …

expectations, macroeconomic dynamics, and the efficient formulation of monetary policy. Economic agents rely on an adaptive … learning technology to form expectations and to update continuously their beliefs regarding the dynamic structure of the … between monetary policy and economic outcomes. We find that policies that would be efficient under rational expectations can …

extent to which inflation expectations are formed by the announced targets. As the credibility of the central bank increases … expectation in emerging economies. The findings denote that credibility is quite relevant to reduce inflation expectations and … inflation targeting system is inflation expectations. The success of a central bank in achieving targets depends on to the …