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.
Inflation targeting and credibility: a note on the recent empirical literature
TRONZANO, MARCO ROBERTO
2005-01-01
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.File in questo prodotto:
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