Time-Inconsistency, Democracy, and Optimal Contingent Rules
AbstractIn a stochastic world there appears to be a trade-off between the necessary 'tying of hands' to conquer the effects of time-inconsistency and the desirability of flexible response. However, it is in principle possible for the electorate to achieve an optimal outcome by use of discriminatory electoral punishment, provided it has access to all relevant macro data prior to the election. Alternatively, it could punish an independent central bank mandated to pursue this outcome (but impotent without such a mandate): this has advantages in information and flexibility and allows elections to concentrate on nonconsensual issues. Copyright 1995 by Royal Economic Society.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 47 (1995)
Issue (Month): 2 (April)
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Other versions of this item:
- Minford, Patrick, 1993. "Time-inconsistency, Democracy and Optimal Contingent Rules," CEPR Discussion Papers, C.E.P.R. Discussion Papers 767, C.E.P.R. Discussion Papers.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
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- Mariano Tommasi & Carlos Scartascini & Ernesto Stein, 2010.
"Veto Players and Policy Trade-offs. An Intertemporal Approach to Study the Effects of Political Institutions on Policy,"
Working Papers, Universidad de San Andres, Departamento de Economia
101, Universidad de San Andres, Departamento de Economia, revised Mar 2010.
- Carlos Scartascini & Mariano Tommasi & Ernesto Stein, 2010. "Veto Players and Policy Trade-Offs- An Intertemporal Approach to Study the Effects of Political Institutions on Policy," Research Department Publications, Inter-American Development Bank, Research Department 4660, Inter-American Development Bank, Research Department.
- Mariano Tommasi & Carlos Scartascini & Ernesto H. Stein, 2010. "Veto Players and Policy Trade-Offs: An Intertemporal Approach to Study the Effects of Political Institutions on Policy," IDB Publications 6787, Inter-American Development Bank.
- Iannis A. Mourmouras & Michael G. Arghyrou, 1999. "Monetary Policy at the European Periphery. Greek Experience and Lessons for Transition Economies," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 9910, Centre for Economic Reform and Transformation, Heriot Watt University.
- Lippi, Francesco & Swank, Otto H., 1999. "Rational Voters, Elections, and Central Banks: Do Representative Democracies Need Nonrepresentative Institutions?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 21(4), pages 515-525, July.
- Herrendorf, Berthold, 1998. "Inflation Targeting as a Way of Precommitment," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 50(3), pages 431-48, July.
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