What determines the credibility of the central bank of Israel in the public eye? Academic Article uri icon

abstract

  • In line with the rational expectations' approach, economists emphasize transparency as a key factor for Central Banks' credibility. In this paper, a psychological approach yields different results: trust in the Banks' policy is associated with the professionalism and independence of the Bank and not with its transparency. It is a subtle difference: transparency is indeed a positive factor in the overall perception of the Bank as trustworthy, but a statistical analysis shows that not all aspects of perception are relevant to trust in the Bank's credibility in its inflationary policy. Accepted for publication in International Journal of Central Banking

publication date

  • January 1, 2016