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Barro-Gordon revisited: Reputational equilibria with inferential expectations

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Listed author(s):
  • Timo Henckel
  • Gordon D. Menzies
  • Nick Prokhovnik
  • Daniel J. Zizzo

Abstract

We incorporate inferential expectations into the Barro-Gordon model (1983a) of time inconsistency and consider reputational equilibria. The range of sustainable equilibria shrinks as the private sector becomes more belief-conservative.

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File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2017-03/29_henckel_menzies_prokhovnik_zizzo_2010.pdf
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Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2010-29.

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Length: 10 pages
Date of creation: Oct 2010
Handle: RePEc:een:camaaa:2010-29
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Find related papers by JEL classification:
  • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
  • 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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  1. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
  2. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
  3. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
  4. Menzies Gordon Douglas & Zizzo Daniel John, 2009. "Inferential Expectations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-27, December.
  5. Carl E. Walsh, 2010. "Monetary Theory and Policy, Third Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262013770, July.
  6. Gordon Menzies & Daniel Zizzo, 2007. "Exchange Rate Markets And Conservative Inferential Expectations," CAMA Working Papers 2007-02, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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Cited by:

  1. Timo Henckel & Gordon D. Menzies & Daniel J. Zizzo, 2013. "The Great Recession and the Two Dimensions of European Central Bank Credibility," CAMA Working Papers 2013-55, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. John Duffy & Frank Heinemann, 2016. "Lifecycle Central Bank Reputation, Cheap Talk and Transparency as Substitutes for Commitment: Experimental Evidence," Working Papers 161703, University of California-Irvine, Department of Economics.
  3. John Duffy & Frank Heinemann, 2016. "Central Bank Reputation, Cheap Talk and Transparency as Substitutes for Commitment: Experimental Evidence," SFB 649 Discussion Papers SFB649DP2016-053, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Piotr, Staszkiewicz, 2012. "Model for reputational risk for subsidiaries of non-public group with reciprocal shareholding," MPRA Paper 35812, University Library of Munich, Germany.
  5. Bruce Lyons & Gordon Menzies & Daniel Zizzo, 2012. "Conflicting evidence and decisions by agency professionals: an experimental test in the context of merger regulation," Theory and Decision, Springer, vol. 73(3), pages 465-499, September.

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