Central Bank Credibility: Why Do We Care? How Do We Build It?

Alan Blinder

No 7161, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Central bank credibility plays a pivotal role in much of the modern literature on monetary policy, yet it is difficult to measure or even assess objectively. A survey of central bankers was conducted to determine their attitudes on two important issues: why credibility matters, and how credibility can be built. The central bankers' answers are compared with the responses of NBER-affiliated macro and monetary economists. The two groups agree much more than they disagree. They are particularly united in their evaluations of ways to make a central bank credible -- assigning high ratings to the central bank's track record and low ratings to theoretical ideas like precommitment and incentive-compatible contracts.

JEL-codes: E5 (search for similar items in EconPapers)
Date: 1999-06
New Economics Papers: this item is included in nep-mon
Note: EFG ME
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Citations: View citations in EconPapers (48)

Published as Blinder, A. S. "Central-Bank Credibility: Why Do We Care? How Do We Build It?," American Economic Review, 2000, v90(5,Dec), 1421-1431.

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