Rogoff's 'Conservative' Central Banker Restored: Asymetric Information and the Delagation of Monetary Policy

Ben Lockwood

Discussion Papers from University of Exeter, Department of Economics

Abstract: This paper shows that delegation of monetary policy to a central banker (CB) who is conservative in Rogoff's sense can still be desireable even though the government is able to set employment and/or inflation targets for the CB. A necessary and sufficient condition for Rogoff-conservatism is that the private sector is at some stage better informed about the structure of the economy than the goverment is at the date of delegation. Such asymmetric information is shown ato arise naturally in multi-period settings where the CB and private sector can aquire over time information about processes generating supply shocks.

Keywords: BANKS; MONETARY POLICY (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 16 pages
Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:9518

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