Revisiting the Case for a Populist Central Banker
AbstractIt is known that discretionary policy may give rise to an inflationary bias if wages are negotiated in nominal terms. It has recently been argued that this bias can be eliminated, and welfare maximized, by the appointment of a central banker who does not care at all about inflation (a "populist" central banker). A conceptual flaw of the latter result is identified here. It is shown that when wages are negotiated in nominal terms the result is true only in the special case of a single, allencompassing, union. In the more general case of multiple unions, however, inflation increases linearly with their number and a populist central bank may turn out to decrease welfare.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 386.
Date of creation: Oct 2000
Date of revision:
central bank conservatism; nominal wage bargaining;
Other versions of this item:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guzzo, Vincenzo & Velasco, Andres, 1999. "The case for a populist Central Banker," European Economic Review, Elsevier, vol. 43(7), pages 1317-1344, June.
- Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
- Lippi, Francesco, 1999. "Strategic Monetary Policy with Non-Atomistic Wage Setters: A Case for Non-Neutrality," CEPR Discussion Papers 2218, C.E.P.R. Discussion Papers.
- Helge Berger & Carsten Hefeker & Ronnie Schoeb, 2000.
"Optimal Central Bank Conservatism and Monopoly Trade Unions,"
UWO Department of Economics Working Papers
200014, University of Western Ontario, Department of Economics.
- Helge Berger & Carsten Hefeker & Ronnie Schöb, 2004. "Optimal Central Bank Conservatism and Monopoly Trade Unions," IMF Staff Papers, Palgrave Macmillan, vol. 51(3), pages 585-605, November.
- Helge Berger & Carsten Hefeker & Ronnie Schöb, 2001. "Optimal Central Bank Conservatism and Monopoly Trade Unions," CESifo Working Paper Series 407, CESifo Group Munich.
- Carsten Hefeker & Helge Berger & Ronnie SchlÃ¶b, 2002. "Optimal Central Bank Conservatism and Monopoly Trade Unions," IMF Working Papers 02/44, International Monetary Fund.
- Guzzo, Vincenzo & Velasco, Andres, 2002. "Revisiting the case for a populist central banker: A comment," European Economic Review, Elsevier, vol. 46(3), pages 613-621, March.
- Vincenzo Cuciniello, 2007. "Optimal monetary policy under a floating regime with non-atomistic wage setters," IHEID Working Papers 12-2007, Economics Section, The Graduate Institute of International Studies.
- Acocella Nicola & Di Bartolomeo Giovanni & Tirelli Patrizio, 2007.
"The macroeconomics of social pacts,"
0028, Department of Communication, University of Teramo.
- Cuciniello Vincenzo, 2007. "Optimal monetary policy in a monetary union with non-atomistic wage setters," wp.comunite 0014, Department of Communication, University of Teramo.
- Luca Dedola & Eugenio Gaiotti & Luca Silipo, 2001.
"Money demand in the euro area: do national differences matter?,"
Temi di discussione (Economic working papers)
405, Bank of Italy, Economic Research and International Relations Area.
- Luca Dedola & Eugenio Gaiotti & Luca Silipo, 2004. "Money Demand in theEuroArea: Do National Differences Matter?," Macroeconomics 0404019, EconWPA, revised 24 Apr 2004.
- Cuciniello, Vincenzo, 2007. "Strategic monetary policy in a monetary union with non-atomistic wage setters," MPRA Paper 3789, University Library of Munich, Germany, revised Jun 2007.
- Nicola Acocella & Giovanni Bartolomeo & Patrizio Tirelli, 2007. "Fiscal Leadership and Coordination in the EMU," Open Economies Review, Springer, vol. 18(3), pages 281-289, July.
- Nicola Acocella & Giovanni Bartolomeo & Wilfried Pauwels, 2010. "Is there any scope for corporatism in macroeconomic policies?," Empirica, Springer, vol. 37(4), pages 403-424, November.
- Cavallari, Lilia, 2001. "Inflationary performance in a monetary union with large wage setters," ZEI Working Papers B 11-2001, ZEI - Center for European Integration Studies, University of Bonn.
- Acocella, Nicola & Di Bartolomeo, Giovanni & Tirelli, Patrizio, 2007. "Monetary conservatism and fiscal coordination in a monetary union," Economics Letters, Elsevier, vol. 94(1), pages 56-63, January.
- Lilia Cavallari, 2001. "Macroeconomic Performance and Wage Bargaining in a Monetary Union," Empirica, Springer, vol. 28(4), pages 419-433, December.
- Clemente De Lucia, 2003. "Wage Setters, Central Bank Conservatism and Economic Performance," ISAE Working Papers 34, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- Bernd Hayo & Carsten Hefeker, 2001. "Do We Really Need Central Bank Independence? A Critical Re- examination," Macroeconomics 0103006, EconWPA.
- Gnocchi, Stefano, 2006. "Optimal simple monetary policy rules and non-atomistic wage setters in a New-Keynesian framework," Working Paper Series 0690, European Central Bank.
- Richard Mash, 2000. "The Time Inconsistency of Monetary Policy with Inflation Persistence," Economics Series Working Papers 15, University of Oxford, Department of Economics.
- Lawler, Phillip, 2005. "Central bank inflation contracts and strategic wage setting in a multiunion economy," Economics Letters, Elsevier, vol. 86(3), pages 323-329, March.
- Hayo, Bernd & Hefeker, Carsten, 2002. "Reconsidering central bank independence," European Journal of Political Economy, Elsevier, vol. 18(4), pages 653-674, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.