degrees of credibility, in which commitment and discretion become special cases of what we call quasi commitment. The monetary … measure of the (lack of) credibility of the monetary policy authority, we investigate the welfare effect of a marginal … increase in credibility. Our main finding is that, in a simple model of the monetary transmission mechanism, most of the gains …

degrees of credibility, in which commitment and discretion become special cases of what we call quasi commitment. The monetary … measure of the (lack of) credibility of the monetary policy authority, we investigate the welfare effect of a marginal … increase in credibility. Our main finding is that, in a simple model of the monetary transmission mechanism, most of the gains …

credibility. In our setting, central bank credibility is proportional to the deviation of inflation expectations from the … announced inflation target, with positive deviations being more costly compared to negative ones. A loss in policy credibility …. We find that the extended model with credibility effects matches well the key macroeconomic data over specific past …

. This fact reflects its success. Well‐anchored inflation expectations contribute to macroeconomic stability while leaving …