01971cas a2200265 a 4500 AALejournalIMF020913 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513546124 1018-5941 BD-DhAAL BD-DhAAL Kostadinov, Rumen. Credibility Dynamics and Disinflation Plans / Rumen Kostadinov, Francisco Roldan. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We study the optimal design of a disinflation plan by a planner who lacks commitment. Having announced a plan, the Central banker faces a tradeoff between surprise inflation and building reputation, defined as the private sector's belief that the Central bank is committed to the plan. Some plans are harder to sustain: the planner recognizes that paving out future grounds with temptation leads the way for a negative drift of reputation in equilibrium. Plans that successfully create low inflationary expectations balance promises of lower inflation with dynamic incentives that make them more credible. When announcing the disinflation plan, the planner takes into account these anticipated interactions. We find that, even in the zero reputation limit, a gradual disinflation is preferred despite the absence of inflation inertia in the private economy. Mode of access: Internet United States imf Roldan, Francisco. IMF Working Papers; Working Paper ; No. 2020/085 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/085/001.2020.issue-085-en.xml IMF e-Library