Monetary policy with private information: a role for monetary targets

José I. García de Paso ()
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José I. García de Paso: Universidad Complutense de Madrid.

No 9315, Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: This paper examines the optimal design of a set of legislative rules which balances credibility in monetary policy when the central banker has some private information. The main result is that the best legislative package should include a monetary target set by Congress, a targeting horizon consisting of one period of time and a small punishment on the central banker if it deviates from the target. Moreover, it is shown that both the discretionary and the average targeting approaches to monetary policy are nested into our more comprehensive approach.

Keywords: Monetary; policy.; Política; monetaria. (search for similar items in EconPapers)
Pages: 24 pages
Date: 1993
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