Costly Information Acquisition and Delegation to a “Liberal” Central Banker

Johan Lagerlof

Economics and Politics, 2001, vol. 13, issue 3, 221-236

Abstract: This paper develops a model of monetary policy in which the central banker can acquire costly information about a supply shock. It is shown that, with this assumption, it may be optimal for society to delegate to a “weight‐liberal” central banker, a result which contrasts with that of Rogoff (1985). This result points at a limitation of Rogoff's argument. It may also explain why the issue of delegating monetary policy to an independent and “weight‐conservative” central banker often is politically controversial.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:13:y:2001:i:3:p:221-236

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