What Determines the Credibility of the Central Bank of Israel in the Public Eye

International Journal of Central Banking, Forthcoming

37 Pages Posted: 10 Jun 2013 Last revised: 15 Dec 2014

See all articles by Zeev Kril

Zeev Kril

Ben-Gurion University of the Negev

David Leiser

Dept. of Psychology - Ben Gurion University of the Negev

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics

Date Written: December 15, 2014

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, because transparency is indeed a positive ‎factor in the overall image of the Bank, but a statistical analysis shows that not all ‎aspects of the positive image are relevant to trust in the Bank's inflationary policy.‎

Keywords: Credibility, Transparency, Inflation Expectations, Central Bank

JEL Classification: E58‎

Suggested Citation

Kril, Zeev and Leiser, David and Spivak, Avia, What Determines the Credibility of the Central Bank of Israel in the Public Eye (December 15, 2014). International Journal of Central Banking, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2276673 or http://dx.doi.org/10.2139/ssrn.2276673

Zeev Kril

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

David Leiser (Contact Author)

Dept. of Psychology - Ben Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

HOME PAGE: http://www.bgu.ac.il/~dleiser

Avia Spivak

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel

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