HOW CONSERVATIVE DOES THE CENTRAL BANKER HAVE TO BE? ON THE TREATMENT OF EXPECTATIONS UNDER DISCRETIONARY POLICYMAKING

Alfred V. Guender ()

Australian Economic Papers, 2009, vol. 48, issue 1, pages 34-49

Abstract: This paper explores an issue that arises in the delegation process. The paper shows that a myopic central banker, one who treats expectations as constant in setting discretionary policy, can replicate the behaviour of output and inflation under policy from a timeless perspective. For that to happen, society must delegate a price level target or a speed limit policy to a central banker who is more weight-conservative than society. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd/University of Adelaide and Flinders University.

Date: 2009

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Working Paper: How Conservative Does the Central Banker Have to Be? On the Treatment of Expectations under Discretionary Policymaking (2007)
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