Central banker faces a tradeoff between surprise inflation and building reputation, defined as the private sector's belief … future grounds with temptation leads the way for a negative drift of reputation in equilibrium. Plans that successfully … the zero reputation limit, a gradual disinflation is preferred despite the absence of inflation inertia in the private …

We define and study transparency, credibility, and reputation in a model where the central bank's characteristics are … unobservable to the private sector and are inferred from the policy outcome. A low-credibility bank optimally conducts a more … inflationary policy than a high-credibility bank, in the sense that it induces higher inflation, but a less expansionary policy in …