Belke, Ansgar; Freytag, Andreas; Keil, Jonas; Schneider, Friedrich:
The Credibility of Monetary Policy Announcements: Empirical Evidence for OECD Countries since the 1960s
In: DIW Diskussionspapiere = Discussion Papers / Deutsches Institut für Wirtschaftsforschung (2012), No. 1225, pp. 1 - 23
2012article/chapter in journal
EconomicsFaculty of Business Administration and Economics » Economics » Macroeconomics
Title:
The Credibility of Monetary Policy Announcements: Empirical Evidence for OECD Countries since the 1960s
Author:
Belke, AnsgarUDE
GND
113316771
LSF ID
47861
ORCID
0000-0002-9743-4758ORCID iD
Other
connected with university
;Freytag, Andreas;Keil, Jonas;Schneider, Friedrich
Year of publication:
2012
WWW URL:
http://www.diw.de/documents/publikationen/73/diw_01.c.405984.de/dp1225.pdf
Appears in
DIW Diskussionspapiere = Discussion Papers / Deutsches Institut für Wirtschaftsforschung
in:
No. 1225, pp. 1 - 23
ISSN
1433-0210 Show availability online & print

Abstract:

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability.