How Conservative Does the Central Banker Have to Be? On the Treatment of Expectations under Discretionary Policymaking

Alfred Guender

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This paper explores an issue that arises in the delegation process. The paper shows that a myopic central banker, one who treats expectations as constant in setting discretionary policy, can replicate the behavior of output and inflation under policy from a timeless perspective. For that to happen, society must delegate a price level target or a speed limit policy to a central banker who is more weight-conservative than society.

Keywords: New Keynesian Model; Price Level Targeting; Speed Limit Policy; Conservative Central Banker (search for similar items in EconPapers)
JEL-codes: E3 E5 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-10-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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https://repec.canterbury.ac.nz/cbt/econwp/0704.pdf (application/pdf)

Related works:
Journal Article: HOW CONSERVATIVE DOES THE CENTRAL BANKER HAVE TO BE? ON THE TREATMENT OF EXPECTATIONS UNDER DISCRETIONARY POLICYMAKING (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:07/04

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