Central bank independence and conservatism under uncertainty: Substitutes or complements?

Carsten Hefeker and Blandine Zimmer ()

No 201001, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper revisits the trade-off between central bank independence and conservatism using a New Keynesian model with uncertainty about the central banker's output gap target. It is shown that when this uncertainty is high, the trade-off no longer holds. In this case, the optimal combination between independence and conservatism is characterised by complementarity.

Keywords: Central bank independence; Conservatism; Transparency of monetary policy (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2010
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (2)

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https://www.uni-marburg.de/en/fb02/research-groups ... /01-2010_hefeker.pdf First version, 2010 (application/pdf)

Related works:
Working Paper: Central Bank Independence and Conservatism under Uncertainty: Substitutes or Complements? (2011)
Working Paper: Central bank independence and conservatism under uncertainty: Substitutes or complements? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201001

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