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Inflation, Income Redistribution, and Optimal Central Bank Independence Author info | Abstract | Publisher info | Download info | Related research | Statistics Diana N. Weymark () (Department of Economics, Vanderbilt University)
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The problem of monetary policy delegation is formulated as a two-stage non-cooperative game between the government and the central bank. The solution to this policy game determines the optimal combination of central bank conservatism and independence. The results obtained show that the optimal combination of central bank conservatism and independence that minimizes government losses is not unique and that there is substitutability between these institutional characteristics. Consequently, partial central bank independence can be optimal. The framework I employ provides a theoretical basis for interpreting the results obtained in empirical studies of the relationship between inflation and central bank independence.
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Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number
0102.
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Date of creation: Dec 2000Date of revision:
Mar 2002Handle: RePEc:van:wpaper:0102Contact details of provider: Postal: Box 1819, Station B, Nashville, TN 37235 Fax: 615-343-8495 Email: Web page: http://sitemason.vanderbilt.edu/econ/ More information through EDIRC
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Keywords: Central bank independence inflation bias Other versions of this item:
Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports :
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Andrew Hughes Hallett & Diana N. Weymark, 2003.
"Independent Monetary Policies and Social Equality ,"
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[Downloadable!]
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