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Rogoff's Conservative Central Banker Restored

Berthold Herrendorf () and Ben Lockwood ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper shows that delegation of monetary policy to a weight-conservative central banker is optimal, although the government can also use an inflation contract, an employment target, an inflation target or any combination of these to control the central banker. The key feature of our model is a stochastic inflation bias, arising when wage setters receive some information about a supply shock prior to signing nominal wage contracts. Weight-conservation is shown to be desirable if the stochastic inflation bias cannot be eliminated by optimal choice of the delegation parameters.

Keywords: Conservative Central Banker; Delegation; Incomplete Information (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1996
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https://warwick.ac.uk/fac/soc/economics/research/w ... 95-1998/twerp450.pdf

Related works:
Journal Article: Rogoff's "Conservative" Central Banker Restored (1997)
Working Paper: ROGOFF'S 'CONSERVATIVE' CENTRAL BANKER RESTORED (1996) Downloads
Working Paper: Rogoff's 'Conservative' Central Banker Restored (1996) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:450

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