Announcements and Credibility under Inflation Targeting

Cataloged from PDF version of article.We inspect how inflation target announcements are instrumental in building central bank credibility and shaping inflation expectations. Investigating the role of announcements by using a time varying credibility measure, we find that both the accuracy and the frequency of inflation announcements have a positive impact on how much attention the public pays to target announcements. (C) 2008 Elsevier B.V. All rights reserved