State-Contingent Inflation Contracts and Output Persistence
AbstractThis note shows that the government can achieve its precommitment outcome in monetary policy when output follows an autoregressive process, by offering the central banker a linear contract, and where the parameters of the contract depend on lagged output. This note therefore offers an extension of recent results of Walsh to the case of persistence in real economic variables such as output or unemployment.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 9513.
Length: 7 pages
Date of creation: 1995
Date of revision:
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Web page: http://business-school.exeter.ac.uk/about/departments/economics/
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Other versions of this item:
- Lockwood, Ben, 1996. "State-contingent Inflation Contracts and Output Persistence," CEPR Discussion Papers 1348, C.E.P.R. Discussion Papers.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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- Ronald A. Ratti & Sang-Kun Bae, 2004. "Inflation Contracts, Inflation and Exchange Rate Targeting, and Uncertain Central Bank Preferences," Working Papers 0422, Department of Economics, University of Missouri, revised 21 Dec 2004.
- Ronald A. Ratti & Sang-Kun Bae, 2004.
"Conservative Central Banks, and Nominal Growth, Exchange Rate and Inflation Targets,"
0423, Department of Economics, University of Missouri, revised 15 Oct 2006.
- Sang-Kun Bae & Ronald A. Ratti, 2008. "Conservative Central Banks and Nominal Growth, Exchange Rate and Inflation Targets," Economica, London School of Economics and Political Science, vol. 75(299), pages 549-568, 08.
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