Expectations, credibility, and time-consistent monetary policy

Peter Ireland ()

No 9812, Working Paper from Federal Reserve Bank of Cleveland

Abstract: This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. The author suggests that the problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to that policy even if it imposes short-run costs on the economy.

Keywords: Monetary policy; Rational expectations (Economic theory) (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mon
Date: 1998
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Related works:
Working Paper: Expectations, Credibility, and Time-Consistent Monetary Policy (1999)
Working Paper: Expectations, Credibility, and Time-Consistent Monetary Policy (1999)
Journal Article: EXPECTATIONS, CREDIBILITY, AND TIME-CONSISTENT MONETARY POLICY (2000)
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