Optimal institutions for monetary policy: Contracts, shocks and signaling

Hans Peter Grüner

No 251, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: The effects of different institutional arrangements for the central bank are examined in the presence of economic shocks and uncertainty about the central banker's and the medianvoter's inflation target. A contract which is based on self-imposed monetary target announcements proves to be superior to the best monetary rule if conflicts about the inflation target within society are relatively small compared to the initial uncertainty about the medianvoter's objective. It is superior to the laissez faire solution if unemployment exceeds a certain threshold level. The optimal choice of costs of deviations from auto-imposed targets depends on the type of conflict within society, whether the individuals disagree on the weight of the inflation versus the employment target or on the value of the inflation target itself.

Keywords: signaling; monetary target announcements; monetary rules (search for similar items in EconPapers)
JEL-codes: E50 E52 E58 (search for similar items in EconPapers)
Date: 1995
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/101487/1/746528329.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp2:251

Access Statistics for this paper

More papers in Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy" Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).