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Endogenous monetary commitment

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  • Libich, Jan
  • Stehlík, Petr

Abstract

We develop an asynchronous framework in which each player can optimally select the frequency of his moves based on cost-benefit considerations. To demonstrate how such ability to commit can alleviate coordination problems, we apply the framework to monetary policy.

Suggested Citation

  • Libich, Jan & Stehlík, Petr, 2011. "Endogenous monetary commitment," Economics Letters, Elsevier, vol. 112(1), pages 103-106, July.
  • Handle: RePEc:eee:ecolet:v:112:y:2011:i:1:p:103-106
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    References listed on IDEAS

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    More about this item

    Keywords

    Commitment Endogenous timing Asynchronous games Strict vs.flexible inflation targeting;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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