Description

Using data on long-term interest rates for 17 industrial countries, this paper develops some simple measures of monetary policy credibility and then tests if such measures improve the out-of-sample forecasts of conventional models of the inflation-unemployment process. The results provide some evidence in favor of the Lucas critique by showing that the short-run unemployment-inflation trade-off tends to improve in countries that are successful in providing low and stable inflation.

Taxonomy

Economic policy , Inflation , Monetary policy

More publications in this series: Working Papers

More publications by: Papa M'B P N'Diaye ; Douglas Laxton