Transparency and Credibility: Monetary Policy with Unobservable Goals

Jon Faust (faustj@jhu.edu) and Lars Svensson

Working Papers from Stockholm - International Economic Studies

Abstract: We define and study transparency, credibilitym and reputation in a model where the central bank's characteristics are unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more inflationary policy than a high-credibility bank, in the sense that it induces higher inflation, but a less expansionary policy in the sense that it induces lower inflation and employment than expected.

Keywords: MONETARY POLICY; CENTRAL BANKS; INFLATION (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1998
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Citations: View citations in EconPapers (35)

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Related works:
Journal Article: Transparency and Credibility: Monetary Policy with Unobservable Goals (2001)
Working Paper: Transparency and Credibility: Monetary Policy with Unobservable Goals (1998)
Working Paper: Transparency and credibility: monetary policy with unobservable goals (1998)
Working Paper: Transparency and Credibility: Monetary Policy with Unobservable Goals (1998)
Working Paper: Transparency and Credibility: Monetary Policy with Unobservable Goals (1998)
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