society's loss function. While rational expectations and perfect credibility are generally beneficial with either a price …

shocks. The public needs to form its inflationary expectations and can make use of central bank announcements. However …, because of the credibility problem that the central bank faces, the public will not believe a precise announcement. By …

A minimal central bank credibility, with a non-zero probability of not renegning his commitment ("quasi …-commitment"), is a necessary condition for anchoring inflation expectations and stabilizing inflation dynamics. By contrast, a complete … lack of credibility, with the certainty that the policy maker will renege his commitment ("optimal discretion"), leads to …

sustainable plans (Chari and Kehoe, 1990). Both interpretations of “imperfect credibility” in optimal monetary policy design are …

amount of credibility. This induces the private investors to rationally take into account information revealed through …

A numerical measure of central bank credibility, which can be incorporated into a New Keynesian model under bounded …-term predictions, which are different from those of the central bank. It is shown that central bank credibility matters for … macroeconomic stability. As the credibility increases, macroeconomic variables vary less. This generates endogenous volatility …

importantly, the additional fiscal conditionality can enhance the credibility of the central bank to achieve price stability. We … emphasize how the level and structure of government debt emerge as key factors affecting the credibility of monetary policy with …