Standard models of policy credibility, defined as the expectation that an announced policy will be carried out …, emphasize the preferences of the policymaker, and the role of tough policies in signalling toughness and raising credibility … credibility of a no-devaluation pledge in subsequent periods. We test this implication on data for the interest rate differential …

This study revisits and tests empirically the Portfolio Theory of Inflation (PTI), which analyzes how the effectiveness … (Bossone, The portfolio theory of inflation and policy (in)effectiveness, 2019). The PTI shows that when an economy is heavily …

' (investors'?) motives are unobservable. This paper analyzes the crucial role of imperfect credibility in a currency crisis with a … innovations: (1) It specifies the cost of imperfect credibility, and (2) It quantifies the cost of imperfect credibility …. Imperfect credibility generates small (but costly) average interest rate differentials. Imperfect credibility cannot generate …

the EMS is the only appealing policy, as all interventions at the borders of an official zone signal non-credibility to …

different methods to study the credibility of the detected fluctuation bands. The detected lack of credibility in a high …