"Credibility" in Context: Do Central Bankers and Economists Interpret the Term Differently?
The idea that the 'credibility' of monetary policy is important receives almost universal assent. But the word can mean very different things in different contexts. In particular, the meaning that it has been given by the work of Robert Barro and David Gordon is a very special one. It should not be presumed that in ordinary discussion of 'credibility' theirs is always the meaning people have in mind. Consequently, Alan Blinder's survey on attitudes to 'credibility', which failed to specify what he meant by the term, might be most misleading, and if unwarranted inferences are not to be drawn a most careful interpretation of it is required.
Volume (Year): 1 (2004)
Issue (Month): 3 (December)
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- Barro, Robert J. & Gordon, David B., 1983.
"Rules, discretion and reputation in a model of monetary policy,"
Journal of Monetary Economics,
Elsevier, vol. 12(1), pages 101-121.
- Robert J. Barro & David B. Gordon, 1983. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
- Issing,Otmar & Gaspar,Vitor & Angeloni,Ignazio & Tristani,Oreste, 2001.
"Monetary Policy in the Euro Area,"
Cambridge University Press, number 9780521783248, December.
- Alan S. Blinder, 2000.
"Central-Bank Credibility: Why Do We Care? How Do We Build It?,"
American Economic Review,
American Economic Association, vol. 90(5), pages 1421-1431, December.
- Alan S. Blinder, 1999. "Central Bank Credibility: Why Do We Care? How Do We Build It?," NBER Working Papers 7161, National Bureau of Economic Research, Inc.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
- David Backus & John Driffill, 1985. "Rational Expectations and Policy Credibility Following a Change in Regime," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 211-221.
- Barro, Robert J & Gordon, David B, 1983.
"A Positive Theory of Monetary Policy in a Natural Rate Model,"
Journal of Political Economy,
University of Chicago Press, vol. 91(4), pages 589-610, August.
- Robert J. Barro & David B. Gordon, 1981. "A Positive Theory of Monetary Policy in a Natural-Rate Model," NBER Working Papers 0807, National Bureau of Economic Research, Inc.
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