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What Determines the Credibility of the Central Bank of Israel in the Public Eye?

Author

Listed:
  • Zeev Kril

    (Ben Gurion University of the Negev)

  • David Leiser

    (Ben Gurion University of the Negev)

  • Avia Spivak

    (Ben Gurion University of the Negev)

Abstract

In line with the rational expectations approach, economists emphasize transparency as a key factor for central banks’ credibility. In this paper, a psychological approach yields different results: trust in the banks’ policy is associated with the professionalism and independence of the bank and not with its transparency. It is a subtle difference: transparency is indeed a positive factor in the overall perception of the bank as trustworthy, but a statistical analysis shows that not all aspects of perception are relevant to trust in the bank’s credibility in its inflationary policy.

Suggested Citation

  • Zeev Kril & David Leiser & Avia Spivak, 2016. "What Determines the Credibility of the Central Bank of Israel in the Public Eye?," International Journal of Central Banking, International Journal of Central Banking, vol. 12(1), pages 67-93, March.
    • Handle: RePEc:ijc:ijcjou:y:2016:q:1:a:3
    as

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    References listed on IDEAS

    as
    1. Armand Fouejieu & Scott Roger, 2013. "Inflation Targeting and Country Risk; An Empirical Investigation," IMF Working Papers 13/21, International Monetary Fund.
    2. 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.
    3. Isabelle Salle, 2013. "Ciblage de l'inflation, transparence et anticipations – une revue de la littérature récente," Revue d'économie politique, Dalloz, vol. 123(5), pages 697-736.
    4. Gaffeo, Edoardo & Canzian, Giulia, 2011. "The psychology of inflation, monetary policy and macroeconomic instability," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 660-670.
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    Citations

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    Cited by:

    1. Leiser, David & Benita, Rinat & Bourgeois-Gironde, Sacha, 2016. "Differing conceptions of the causes of the economic crisis: Effects of culture, economic training, and personal impact," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 154-163.
    2. Karoline S. Rogge & Elisabeth Dütschke, 2017. "Exploring Perceptions of the Credibility of Policy Mixes: The Case of German Manufacturers of Renewable Power Generation Technologies," SPRU Working Paper Series 2017-23, SPRU - Science and Technology Policy Research, University of Sussex.
    3. repec:mnb:finrev:v:16:y:2017:i:2:p:64-85 is not listed on IDEAS

    More about this item

    JEL classification:

    • 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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