Time Inconsistency: An Updated Survey of the Literature
We provide an updated survey of the literature on time inconsistency, focusing on the key contributions that followed the seminal papers of Kydland and Prescott (1977) and Barro and Gordon (1983a). Starting from the traditional models addressing the time inconsistency problem of monetary policy, we then proceed to analyse the more recent contributions accounting for the important monetary and fiscal policy interactions. We conclude by sketching an encompassing open-economy model summarising the most recent positions concerning the optimal management of fiscal policies.
|Date of creation:||Oct 2000|
|Date of revision:||Oct 2000|
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- Taylor, John B., 1983. "`Rules, discretion and reputation in a model of monetary policy' by Robert J. Barro and David B. Gordon," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 123-125.
- Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March.
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