flexibility and credibility; similarly, New Zealand's improved inflation performance was achieved without a discernable increase …

Continuos credibility effects are incorporated into a simple model of optimal monetary policy. The resulting model … provides explanations for a number of "folk theorems" about credibility in monetary policy. A central bank with low initial … credibility pursues a more restrictive policy than a central bank with high initial credibility. It accommodates shocks less and …

This paper analyzes the time-varying credibility of the Fed's inflation target in an empirical macro model with … across monetary policy regimes. I find that imperfect credibility is pronounced during the Volcker Disinflation and to a …