The Case for a Populist Central Banker
A. Velasco and
Working Papers from C.V. Starr Center for Applied Economics, New York University
We present a general equilibrium optimizing model in which we study the joint effects of centralization of wage setting and central bank conservatism on economic performance. Several striking conclusions emerge. IN relatively centralized labor markets employment and output are decreasing, and inflation is initially increasing and then decreasing, in the degree of central bank conservatism. A radical-populist central banker who cares not at all about inflation (alternatively, who is not conservative) maximizes social welfare.
Keywords: CENTRAL BANKS; WAGES; INFLATION; UNEMPLOYMENT (search for similar items in EconPapers)
JEL-codes: E5 J5 (search for similar items in EconPapers)
Pages: 30 pages
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Persistent link: https://EconPapers.repec.org/RePEc:cvs:starer:98-26
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