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How delegation improves commitment

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  • Perino, Grischa

Abstract

McCallum (1995, American Economic Review Papers and Proceedings 85 (2), 207-211) conjectures that delegation merely relocates the commitment problem but does not solve it. This holds if optimal ex-ante policies do not change if additional information becomes available. However, with a flexibility-credibility trade-off delegation improves credibility.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 106 (2010)
Issue (Month): 2 (February)
Pages: 137-139

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Handle: RePEc:eee:ecolet:v:106:y:2010:i:2:p:137-139

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Time-inconsistency Commitment Delegation;

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References

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  1. Rodney D. Ludema & Anders Olofsgård, 2006. "Delegation versus Communication in the Organization of Government," Working Papers, Georgetown University, Department of Economics gueconwpa~06-06-04, Georgetown University, Department of Economics.
  2. Bennett T. McCallum, 1996. "Crucial Issues Concerning Central Bank Independence," NBER Working Papers 5597, National Bureau of Economic Research, Inc.
  3. Daron Acemoglu, 2002. "Why Not a Political Coase Theorem? Social Conflict, Commitment and Politics," NBER Working Papers 9377, National Bureau of Economic Research, Inc.
  4. Roelfsema, Hein, 2007. "Strategic delegation of environmental policy making," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 270-275, March.
  5. Alberto Alesina & Guido Tabellini, 2007. "Bureaucrats or Politicians? Part I: A Single Policy Task," American Economic Review, American Economic Association, American Economic Association, vol. 97(1), pages 169-179, March.
  6. Jensen, Henrik, 1997. "Credibility of Optimal Monetary Delegation," American Economic Review, American Economic Association, American Economic Association, vol. 87(5), pages 911-20, December.
  7. Bennett T. McCallum, 1995. "Two Fallacies Concerning Central Bank Independence," NBER Working Papers 5075, National Bureau of Economic Research, Inc.
  8. Bevger, H. & Haan, J. de & Eijffinger, S.C.W., 2000. "Central Bank Independence: An Update of Theory and Evidence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-82768, Tilburg University.
  9. Alberto Alesina & Guido Tabellini, 2007. "Bureaucrats or Politicians? Part II: Multiple Policy Tasks," Levine's Working Paper Archive 321307000000000875, David K. Levine.
  10. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(4), pages 1169-89, November.
  11. Moser, Peter, 1999. "Checks and balances, and the supply of central bank independence," European Economic Review, Elsevier, Elsevier, vol. 43(8), pages 1569-1593, August.
  12. Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 273-86, March.
  13. Paul Levine & John Stern & Francesc Trillas, 2005. "Utility price regulation and time inconsistency: comparisons with monetary policy," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 447-478, July.
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Cited by:
  1. Marek Rusnak & Tomas Havranek & Roman Horvath, 2011. "How to Solve the Price Puzzle? A Meta-Analysis," Working Papers, Czech National Bank, Research Department 2011/02, Czech National Bank, Research Department.
  2. Carlo Cambini & Laura Rondi, 2011. "Independence, Investment and Political Interference: Evidence from the European Union," RSCAS Working Papers, European University Institute 2011/42, European University Institute.
  3. Bernardo Bortolotti & Carlo Cambini & Laura Rondi, 2011. "Regulatory Independence, Ownership and Firm Value: The Role of Political Institutions," RSCAS Working Papers, European University Institute 2011/43, European University Institute.
  4. Yukihiro Yazaki, 2014. "Rights and judicial independence," Economics of Governance, Springer, Springer, vol. 15(2), pages 179-201, May.
  5. Hahn, Volker, 2014. "An argument in favor of long terms for central bankers," Economics Letters, Elsevier, Elsevier, vol. 122(2), pages 132-135.
  6. Carlo Cambini & Laura Rondi, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Working Papers 2010.69, Fondazione Eni Enrico Mattei.

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