A complementary note on the issue of time inconsistency revisited as an extended game

Grégoire Rota-Graziosi () and Hubert Kempf ()
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Grégoire Rota-Graziosi: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Authors registered in the RePEc Author Service: Grégoire ROTA GRAZIOSI

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: Cellini and Lambertini endogenize through a timing game the moves of the central bank and the private sector in a model of monetary policy la Barro and Gordon. They find a multiplicity of equilibria, as the two Stackelberg outcomes emerge as the solutions of the timing game, with different inflation levels. By using the risk-dominance criterion to select the equilibrium we prove that there is a discontinuity in the inflation bias, depending on the inflation aversion of the private sector.

Keywords: Risk Dominance; Endogenous timing; first-second-mover advantage; monetary policy; time consistency (search for similar items in EconPapers)
Date: 2011
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Published in International Game Theory Review, 2011, 13 (4), pp.475-480. ⟨10.1142/S0219198911003106⟩

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Working Paper: A complementary note on the issue of time inconsistency revisited as an extended game (2011)
Working Paper: A complementary note on the issue of time inconsistency revisited as an extended game (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00715222

DOI: 10.1142/S0219198911003106

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