Selected Issues Concerning Monetary Policy and Institutional Design for Central Banks: A Review of Theories

Christian Beddies

No 2000/140, IMF Working Papers from International Monetary Fund

Abstract: In the past decades, much work has been geared toward solving the problem of time inconsistency in monetary policy and analyzing the coordination problem between fiscal and monetary policy. This paper provides a review of the theoretical background to these theories, while also focusing on their inherent problems. It concludes that while the literature makes a strong case for central bank independence, more work should be done in the area of determining the desirable degree of independence with a view to the interplay between fiscal and monetary policy.

Keywords: WP; monetary policy; inflation rate; private sector; public spending; time inconsistency; coordination; public finance; loss function; budget constraint; incentive problem; commitment regime; debt ratio; Inflation; Inflation targeting; Europe (search for similar items in EconPapers)
Pages: 48
Date: 2000-08-01
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Citations: View citations in EconPapers (3)

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