Could Reputation-Bias be a Bigger Problem than Inflation-Bias
AbstractThe theory of policy credibility has been influential in both the design of monetary policymaking institutions and in the implementation of policy. In particular, the idea that reputation' is important has been widely accepted. However, careful attention to its assumptions and implications of the theory reveals many sources of doubt as to its empirical value. First, the theory is implausible, and even if taken seriously does not point to many of the conclusions frequently supposed to be based on it. Second, evidence suggests the theory is false. Third, even policymakers who profess themselves concerned about the maintenance of credibility do not behave consistently in the way the theory says they should.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 9922.
Length: 31 pages
Date of creation: 2000
Date of revision:
DEFLATION ; BANKS ; POLICY MAKING;
Other versions of this item:
- James Forder, 2000. "Could Reputation-Bias be a Bigger Problem than Inflation-Bias?," Economics Series Working Papers 22, University of Oxford, Department of Economics.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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