How Severe is the Time Inconsistency Problem in Monetary Policy?

Stefania Albanesi, Varadarajan Chari and Lawrence Christiano

No 8139, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze two monetary economies - a cash-credit good model and a limited participation model. In our models, monetary policy is made by a benevolent policymaker who cannot commit to future policies. We define and analyze Markov equilibrium in these economies. We show that there is no time inconsistency problem for a wide range of parameter values.

JEL-codes: E5 E61 (search for similar items in EconPapers)
Date: 2001-02
New Economics Papers: this item is included in nep-dge and nep-mon
Note: EFG
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Citations: View citations in EconPapers (23)

Published as Albanesi, Stefania, V. V. Chari and Lawrence J. Christiano. "How Severe Is The Time-Inconsistency Problem In Monetary Policy?," FRB Minneapolis - Quarterly Review, 2003, v27(3,Summer), 17-33.

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Journal Article: How severe is the time-inconsistency problem in monetary policy? (2003)
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