credibility") versus discretionary policy where the Fed reneges on its commitment at all periods with a probability equal to one … ("zero credibility"). The transmission mechanism is the new-Keynesian Phillips curve with auto-correlated cost-push shock. It … includes the labor cost channel or the working capital channel. Discretion with zero credibility of the Fed is rejected. The …

-)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 … of seven central banks and that this influence is economically meaningful. A deteroriation in credibility forces central …

bank credibility. Forward guidance and the credibility of the central bank are uniquely modeled by utilizing a game …-theoretic evolutionary framework. We estimate credibility for the U.S. Federal Reserve with Bayesian methods exploiting survey data on … estimate of Federal Reserve credibility in terms of forward guidance announcements is relatively high, which indicates a degree …

central bank's loss function, and the welfare cost - in a small open economy vis-à-vis a closed economy. Disinflation is … welfare. …

bank credibility. Forward guidance and the credibility of the central bank are uniquely modeled by utilizing a game …-theoretic evolutionary framework. We estimate credibility for the U.S. Federal Reserve with Bayesian methods exploiting survey data on … estimate of Federal Reserve credibility in terms of forward guidance announcements is relatively high, which indicates a degree …