The conservative central banker revisited: Too conservative is more costly than too liberal

Peter Tillmann

European Journal of Political Economy, 2008, vol. 24, issue 4, pages 737-741

Abstract: A conservative central banker, who puts more weight on inflation stabilization than the social planner, solves the stabilization bias of discretionary monetary policy. This note shows that the welfare costs of deviating from the optimal degree of monetary conservatism are asymmetric. A too conservative central banker is more costly than a too liberal central banker.

Keywords: Optimal; monetary; policy; Delegation; Conservative; central; bank; Stabilization; bias (search for similar items in EconPapers)
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:eee:poleco:v:24:y:2008:i:4:p:737-741

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