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The Theory of Monetary Policy Credibility

Author

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  • Helder Ferreira de Mendonça

    (Professor do Departamento de Economia da Universidade Federal Fluminense – UFF, Rio de Janeiro/ RJ, Brasil.)

Abstract

This paper analyzes the main arguments concerning credibility theory for monetary authority from the mainstream literature. In this sense, the origin of the debate entitled rules versus discretion is examined and the advances in literature from the central bank independence proposal. The findings denote that the problem of the inflationary bias for conduction of monetary policy is a result of a set of ad hoc hypotheses used by the literature. Thus, the developments in the literature concerning the credibility from inflationary bias represent a particular case for monetary theory. JEL Classification: E52; E58.

Suggested Citation

  • Helder Ferreira de Mendonça, 2002. "The Theory of Monetary Policy Credibility," Brazilian Journal of Political Economy, Center of Political Economy, vol. 22(3), pages 429-448, July.
    • Handle: RePEc:ekm:repojs:v:22:y:2002:i:3:id:95825
    DOI: 10.1590/0101-31572002-1263
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    JEL classification:

    • 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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