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

Carsten Hefeker and Blandine Zimmer ()

Volkswirtschaftliche Diskussionsbeiträge from Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht

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: 17 pages
Date: 2010
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mic and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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http://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/140-10.pdf (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:sie:siegen:140-10

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