Presidential antagonism and central bank credibility

This study is intended to explain the impact of central bank credibility on inflation in Indonesia at the producer and consumer level. In this study, Central Bank Credibility is measured using an index with values between 0 (zero credibility) and 1 (perfect credibility). Generalized Method of Moments (GMM) method is used to analyze the impact of central bank credibility on inflation. Based on the results, central bank credibility can reduce inflation on both producer and consumer price. Central bank credibility is more sensitive towards producer price index compared to Gross Domestic Product (GDP) deflator and wholesale price index while at the consumer level, central bank credibility is more sensitive towards core inflation compared to headline inflation. -------------------------------------- Penelitian ini menjelaskan dampak kredibilitas Bank Sentral terhadap inflasi di Indonesia. Dampak kredibilitas Bank Sentral dianalisis pada tingkat produsen maupun konsumen. Untuk mengukur kredibilitas Bank Sentral, penelitian ini menggunakan indeks kredibilitas bernilai 0 (zero credibility) hingga 1 (perfect credibility). Metode Generalized Method of Moments (GMM) digunakan untuk menganalisis dampak kredibilitas Bank Sentral terhadap inflasi. Berdasarkan hasil empiris, kredibilitas Bank Sentral cenderung lebih memengaruhi inflasi pada Indeks Harga Produsen (IHP) dibandingkan Indeks Harga Perdagangan Besar (IHPB) dan deflator Produk Domestik Bruto (PDB). Kredibilitas Bank Sentral lebih memengaruhi inflasi inti dibandingkan dengan inflasi umum. Dari hasil empiris diketahui bahwa kredibilitas Bank Sentral lebih memengaruhi inflasi pada sisi produsen dibandingkan konsumen.

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The Effect of Central Bank Credibility on Forward Guidance in an Estimated New Keynesian Model

10.24149/gwp375r2 ◽

2021 ◽

Vol 2019 (375) ◽

Author(s):

Stephen J. Cole ◽

◽

Enrique Martínez-García ◽

Keyword(s):

Central Bank ◽

New Keynesian ◽

New Keynesian Model ◽

Forward Guidance ◽

Keynesian Model ◽

Central Bank Credibility

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Central Bank Credibility: An Historical and Quantitative Exploration

Central Banks at a Crossroads ◽

10.1017/cbo9781316570401.004 ◽

2016 ◽

pp. 62-144 ◽

Cited By ~ 2

Author(s):

Michael D. Bordo ◽

Pierre L. Siklos

Keyword(s):

Central Bank ◽

Central Bank Credibility

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Why is inflation targeting adopted?

Research in Applied Economics ◽

10.5296/rae.v12i1.16679 ◽

2020 ◽

Vol 12 (1) ◽

pp. 56

Author(s):

Yutaka Kurihara

Keyword(s):

Developing Countries ◽

Exchange Rate ◽

Central Bank ◽

Inflation Targeting ◽

Developed Countries ◽

The Other ◽

Other Hand ◽

Central Bank Credibility

Since the early 1990s, inflation targeting (IT) has been conducted in many countries and the number of the countries has been increasing rapidly. The outcomes of adopting IT has been discussed, however, the incentives of adopting IT is not fully examined. This study focuses on this issue empirically. The results are clearly divided into two types of countries. In developed countries, budget/GDP ratio, central bank credibility, exchange rate stability, and openness of the economy are deterministic elements of adopting IT, however interestingly, inflation itself does not play any roles of adopting IT. On the other hand, only inflation is the deterministic element of adopting IT in developing countries. Other elements, that are deterministic elements in developed countries, do not any effects on introducing IT. Moreover, countries would not like to limit the scope of policies when the economy’s openness is high.

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