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Monetary Policy Credibility: Is there a Magic Bullet?

Author

Listed:
  • Naveen Srinivasan

    (Madras School of Economics)

  • Vidya Mahambare

    (Madras School of Economics)

  • Francesco Perugini

    (Department of Economics, Society, and Politics, University of Urbino, Italy)

Abstract

This paper examines the concept of monetary policy credibility from both the theoretical and practical viewpoints. It also discusses the advantages of high credibility and explains measures that can be taken to enhance it. The article reviews a number of studies that have examined the credibility of monetary policy making over the past decade. Our main conclusion is that credibility is an elusive thing. The only way to be sure of acquiring it is to earn it by deeds. The existing theoretical literature would benefit a great deal by taking this into consideration.

Suggested Citation

  • Naveen Srinivasan & Vidya Mahambare & Francesco Perugini, 2015. "Monetary Policy Credibility: Is there a Magic Bullet?," Working Papers 2015-108, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2015-108
    as

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    File URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-108.pdf
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    References listed on IDEAS

    as
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    5. Cukierman Alex, 1992. "CENTRAL BANK STRATEGY, CREDIBILITY, AND INDEPENDANCE: THEORY AND EVIDENCE: Compte Rendu par Dominique Cariofillo," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 581-590, December.
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    More about this item

    Keywords

    Monetary Policy; Credibility; Institutions;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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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