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Three Dimensions of Central Bank Credibility and Inferential Expectations: The Euro Zone

Timo Henckel (), Gordon D. Menzies (), Peter Moffat () and Daniel Zizzo
Additional contact information
Gordon D. Menzies: University of Technology Sydney & Centre for Applied Macroeconomic Analysis
Peter Moffat: University of East Anglia

Authors registered in the RePEc Author Service: Peter Grant Moffatt ()

No 2019/02, Working Paper Series from Economics Discipline Group, UTS Business School, University of Technology, Sydney

Abstract: We use the behavior of inflation among Eurozone countries to provide information about the degree of credibility of the European Central Bank (ECB) since 2008. We define credibility along three dimensions-official target credibility, cohesion credibility and anchoring credibility - and show in a new econometric framework that the latter has deteriorated in recent history; that is, price setters are less likely to rely on the ECB target when forming inflation expectations.

Keywords: credibility; infl?ation; expectations; anchoring; monetary union; inferential expectations (search for similar items in EconPapers)
JEL-codes: C51 D84 E31 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
Date: 2019-02-21
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Persistent link: https://EconPapers.repec.org/RePEc:uts:ecowps:2019/02

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