Rogoff's 'Conservative' Central Banker Restored

Berthold Herrendorf () and Ben Lockwood ()

No 1386, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper shows that delegation of monetary policy to a weight-conservative central banker is optimal, although the government can also use an inflation contract, an employment target, an inflation target, or any combination of these, to control the central banker. The key feature of our model is a stochastic inflation bias, arising when wage-setters receive some information about a supply shock prior to signing nominal wage contracts. Weight-conservatism is shown to be desirable if the stochastic inflation bias cannot be eliminated by optimal choice of the delegation parameters.

Keywords: Conservative Central Banker; Delegation; Incomplete Information (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 1996-04
References: Add references at CitEc
Citations View citations in EconPapers (22) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP1386.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Rogoff's "Conservative" Central Banker Restored (1997)
Working Paper: Rogoff's Conservative Central Banker Restored (1996)
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:cpr:ceprdp:1386

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP1386.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Series data maintained by ().