The Credibility of Monetary Policy Announcements – Empirical Evidence for OECD Countries since the 1960s

Ansgar Belke, Andreas Freytag (), Jonas Keil and Friedrich Schneider ()

No 355, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability.

Keywords: Credibility; central bank independence; price stability; monetary commitment (search for similar items in EconPapers)
JEL-codes: E31 E50 E52 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The credibility of monetary policy announcements: Empirical evidence for OECD countries since the 1960s (2014)
Working Paper: The Credibility of Monetary Policy Announcements: Empirical Evidence for OECD Countries since the 1960s (2012)
Working Paper: The Credibility of Monetary Policy Announcements - Empirical Evidence for OECD Countries since the 1960s (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:355

DOI: 10.4419/86788409

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