Inflation Targeting and Credibility: A Note on the Recent Empirical Literature

Marco Tronzano ()
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Marco Tronzano: Università degli Studi di Genova, Dipartimento di Economia e Metodi Quantitativi, Postal: Darsena - Via Vivaldi 5 - 16126 Genova - ITALY, http://www.unige.it/

Economia Internazionale / International Economics, 2005, vol. 58, issue 4, 489-506

Abstract: This paper surveys the empirical literature assessing the credibility of monetary policy inside an inflation targeting regime. A basic distinction is drawn between contributions relying on indirect or direct approaches. Whereas the former group of studies exhibits a common drawback, the latter appears better suited to provide a quantitative assessment about the credibility effects associated with this policy rule. Drawing on the existing literature, we outline a promising direction for future research, based on an extension of Svensson (1994) “simplest test” of inflation target credibility inside a Bayesian econometric framework.

Keywords: Inflation Targeting; Monetary Policy; Credibility (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (5)

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