"Rules Rather Than Discretion" After Twenty Five Years: What Have We Learned? What More Can We Learn?

Peter Ireland ()

No 530, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Kydland and Prescott first identified the inflationary bias that results when a central bank does not precommit to a monetary policy rule. Subsequent work, published over the past twenty five years, demonstrates that this inflationary bias can be minimized by appointing central bankers whose preferences or incentives differ systematically from those of society as a whole. Subsequent work also shows that central bankers may optimally choose to maintain their reputations as inflation fighters. The literature to date, however, says remarkably little about how central bankers establish their reputations, or build credibility for their policies, in the first place.

Keywords: Time-consistency; Inflation; Unemployment (search for similar items in EconPapers)
JEL-codes: E31 E52 E61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon and nep-reg
Date: 2002-04-15
View list of references View citations in EconPapers

Downloads: (external link)
http://fmwww.bc.edu/EC-P/WP530.pdf main text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:530

Access Statistics for this paper

More papers in Boston College Working Papers in Economics from Boston College Department of Economics
Address: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Contact information at EDIRC.
Series data maintained by Christopher F Baum ().