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

Zeev Kril, David Leiser and Avia Spivak
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Zeev Kril: Ben Gurion University of the Negev
Avia Spivak: Ben Gurion University of the Negev

International Journal of Central Banking, 2016, vol. 12, issue 1, 67-93

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.

JEL-codes: E58 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (19)

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