A Keynesian Approach to the Credibility of Monetary Policy

Gilberto Libanio

Brazilian Journal of Political Economy, 2000, vol. 20, issue 4, 431-445

Abstract: The traditional perspective on credibility follows the new classical position on the“rules vs. discretion” debate. i.e., it is argued that credibility is obtained if, and only if, themonetary authority is kept away from discretionary policies (“tied hands”). This, however,depends on the hypothesis of the new classical doctrine and may not be valid in models thatopen the possibility of multiple equilibria. This paper tries to discuss the question of credibilityunder the lights of the post-Keynesian model, offering an alternative to the mainstreamview about this theme. JEL Classification: E52; E58.

Keywords: Monetary policy; post-Keynesianism; credibility (search for similar items in EconPapers)
Date: 2000
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