IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v124y2005i3p391-409.html
   My bibliography  Save this article

The credibility of monetary reform – New evidence

Author

Listed:
  • Andreas Freytag

Abstract

The history of monetary policy is characterised by crisis and reform. The paper is dedicated to an explanation of what makes monetary reforms successful. A cross-sectional econometric analysis is chosen to deal with this problem. It is based on a standard macroeconomic model of commitment and credibility. As the dependent variable, we calculate a post-reform inflation rate. The exogenous variables are the degree of legal commitment, the constraining influence of institutions and a new variable for ex-ante credibility of the reform. The paper allows for the conclusion that monetary commitment, the consideration of institutional constraints and abstinence from the money press are crucial for the success of a monetary reform. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Andreas Freytag, 2005. "The credibility of monetary reform – New evidence," Public Choice, Springer, vol. 124(3), pages 391-409, September.
    • Handle: RePEc:kap:pubcho:v:124:y:2005:i:3:p:391-409
    DOI: 10.1007/s11127-005-2055-1
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11127-005-2055-1
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-005-2055-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stanley Fischer & Ratna Sahay & Carlos A. Végh, 2002. "Modern Hyper- and High Inflations," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 837-880, September.
    2. 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.
    3. Fischer, Stanley, 1983. "Indexing and inflation," Journal of Monetary Economics, Elsevier, vol. 12(4), pages 519-541, November.
    4. Adam G. G. Bennett, 1993. "The Operation of the Estonian Currency Board," IMF Staff Papers, Palgrave Macmillan, vol. 40(2), pages 451-470, June.
    5. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(1), pages 230-231, January.
    6. McCallum, Bennett T., 1997. "Crucial issues concerning central bank independence," Journal of Monetary Economics, Elsevier, vol. 39(1), pages 99-112, June.
    7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    8. Freytag Andreas, 1998. "Einige Anmerkungen zur Wahl der Reservewährung eines Currency Boards," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 47(1), pages 3-19, April.
    9. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(4), pages 876-878, October.
    10. Fischer, Bernhard, 1986. "Brasilien ohne Inflation? Eine kritische Würdigung des Cruzado-Planes," Kiel Discussion Papers 124, Kiel Institute for the World Economy (IfW Kiel).
    11. Ignacio Mas, 1995. "Things Governments Do to Money: A Recent History of Currency Reform Schemes and Scams," Kyklos, Wiley Blackwell, vol. 48(4), pages 483-512, November.
    12. Andreas Freytag, 2002. "Success and Failure in Monetary Reform," Books, Edward Elgar Publishing, number 2531, March.
    13. Robert J. Barro, 1983. "Inflationary Finance under Discretion and Rules," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 1-16, February.
    14. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, December.
    15. Roland Vaubel, 1986. "A public choice approach to international organization," Public Choice, Springer, vol. 51(1), pages 39-57, January.
    16. Andreas Freytag, 2001. "Does central bank independence reflect monetary commitment properly? Methodical considerations," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 54(217), pages 181-208.
    17. Hayo, Bernd, 1998. "Inflation culture, central bank independence and price stability," European Journal of Political Economy, Elsevier, vol. 14(2), pages 241-263, May.
    18. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(3), pages 619-631, July.
    19. Mr. Adam Bennett, 1993. "The Operation of the Estonian Currency Board," IMF Policy Discussion Papers 1992/003, International Monetary Fund.
    20. Mr. Adam Bennett, 1994. "Currency Boards: Issues and Experiences," IMF Policy Discussion Papers 1994/018, International Monetary Fund.
    21. Pierre L. Siklos (ed.), 1995. "Great Inflations of the 20th Century," Books, Edward Elgar Publishing, number 546, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:onb:oenbwp:y::i:129:b:1 is not listed on IDEAS
    2. Belke, Ansgar & Freytag, Andreas & Keil, Jonas & Schneider, Friedrich, 2014. "The credibility of monetary policy announcements: Empirical evidence for OECD countries since the 1960s," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 217-227.
    3. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2006. "Are Monetary Rules and Reforms Complements or Substitutes? A Panel Analysis for the World versus OECD Countries," Working Papers 129, Oesterreichische Nationalbank (Austrian Central Bank).
    4. Andreas Freytag & Friedrich Schneider, 2007. "Monetary Commitment, Institutional Constraints and Inflation: Empirical Evidence for OECD Countries since the 1970s," Jena Economics Research Papers 2007-002, Friedrich-Schiller-University Jena.
    5. Belke, Ansgar H. & Herz, Bernhard & Vogel, Lukas, 2005. "Structural Reforms and the Exchange Rate Regime: A Panel Analysis for the World versus OECD Countries," IZA Discussion Papers 1798, Institute of Labor Economics (IZA).
    6. Ansgar Belke & Andreas Freytag & Jonas Keil & Friedrich Schneider, 2012. "The Credibility of Monetary Policy Announcements – Empirical Evidence for OECD Countries since the 1960s," Ruhr Economic Papers 0355, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2006. "Exchange Rate Regimes and Reforms: A Panel Analysis for the World versus OECD Countries," International Finance, Wiley Blackwell, vol. 9(3), pages 317-342, December.
    8. repec:zbw:rwirep:0355 is not listed on IDEAS
    9. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2006. "Beyond Trade – Is Reform Effort Affected by the Exchange Rate Regime? A Panel Analysis for the World versus OECD Countries," Economie Internationale, CEPII research center, issue 107, pages 29-58.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andreas Freytag, 2001. "Why Have Some Monetary Reforms Succeeded and Others Not? - An Empirical Assessment," IWP Discussion Paper Series 04/2001, Institute for Economic Policy, Cologne, Germany.
    2. Andreas Freytag & Friedrich Schneider, 2007. "Monetary Commitment, Institutional Constraints and Inflation: Empirical Evidence for OECD Countries since the 1970s," CESifo Working Paper Series 2001, CESifo.
    3. Belke, Ansgar & Freytag, Andreas & Keil, Jonas & Schneider, Friedrich, 2014. "The credibility of monetary policy announcements: Empirical evidence for OECD countries since the 1960s," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 217-227.
    4. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777, March.
    5. repec:zbw:rwirep:0355 is not listed on IDEAS
    6. Ansgar Belke & Andreas Freytag & Jonas Keil & Friedrich Schneider, 2012. "The Credibility of Monetary Policy Announcements – Empirical Evidence for OECD Countries since the 1960s," Ruhr Economic Papers 0355, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Simon Gilchrist & Vivian Yue & Egon Zakrajšek, 2019. "U.S. Monetary Policy and International Bond Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(S1), pages 127-161, December.
    8. Naape, Baneng, 2019. "Is the Co-Movement Between Budget Deficit and Current Account Deficit Applicable to South Africa?," MPRA Paper 97962, University Library of Munich, Germany, revised 20 Nov 2019.
    9. Adriel Jost, 2018. "Cultural Differences in Monetary Policy Preferences," Working Papers 2018-02, Swiss National Bank.
    10. Kimakova, Alena, 2008. "The political economy of exchange rate regime determination: Theory and evidence," Economic Systems, Elsevier, vol. 32(4), pages 354-371, December.
    11. J. Scott Davis & Ippei Fujiwara & Jiao Wang, 2018. "Dealing with Time Inconsistency: Inflation Targeting versus Exchange Rate Targeting," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(7), pages 1369-1399, October.
    12. Beers, David & de Leon-Manlagnit, Patrisha, 2019. "The BoC-BoE sovereign default database: what’s new in 2019?," Bank of England working papers 829, Bank of England.
    13. Dirk Steffen & Ingo Pitterle, 2004. "Spillover Effects of Fiscal Policy Under Flexible Exchange Rates," Econometric Society 2004 Australasian Meetings 286, Econometric Society.
    14. Edward Ghartey, 2006. "Exchange Pressure, Sterilized Intervention and Monetary Policy in Ghana," EcoMod2006 272100031, EcoMod.
    15. Jyh-Lin Wu, 1994. "Fiscal announcements and real exchange rate dynamics," Open Economies Review, Springer, vol. 5(2), pages 177-190, March.
    16. Amir H. Mozayani & Sanaz Parvizi, 2016. "Exchange Rate Misalignment in Oil Exporting Countries (OPEC): Focusing on Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 20(2), pages 261-276, Spring.
    17. Michael Michaely, 1971. "An Over-all View of Policy Patterns," NBER Chapters, in: The Responsiveness of Demand Policies to Balance of Payments: Postwar Patterns, pages 30-70, National Bureau of Economic Research, Inc.
    18. Nazia Abdul Rehman & Musarrat Shamshir & Khurram Shakir, 2020. "Correlation of Macroeconomic Variables with Twin Deficit in Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 16-11.
    19. Berlemann, Michael & Hielscher, Kai, 2009. "Measuring Effective Monetary Policy Conservatism," Working Paper 89/2009, Helmut Schmidt University, Hamburg.
    20. Busse, Matthias & Shams, Rasul, 2003. "Trade Effects of the East African Community: Do We Need a Transitional Fund?," HWWA Discussion Papers 240, Hamburg Institute of International Economics (HWWA).
    21. repec:zbw:bofitp:2008_005 is not listed on IDEAS
    22. Yana Valeryevna Dyomina, 2019. "Cross-Border Capital Flows in East Asia: Impact of Monetary Policy Measures," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 3, pages 99-124.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:124:y:2005:i:3:p:391-409. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.