Inflation, Government Transfers, and Optimal Central Bank Independence
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 show that the optimal institutional design always requires some degree of central bank independence and that there is substitutability between central bank independence and conservatism. The results also show that partial central bank independence can be optimal and that there are circumstances under which it is optimal for the government to appoint a liberal central banker.
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MIT Press Books,
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- Hughes Hallett, Andrew & Weymark, Diana N., 2004. "Independent monetary policies and social equity," Economics Letters, Elsevier, vol. 85(1), pages 103-110, October.Full references (including those not matched with items on IDEAS)
- Andrew Hughes Hallett & Diana N. Weymark, 2003. "Independent Monetary Policies and Social Equality," Vanderbilt University Department of Economics Working Papers 0307, Vanderbilt University Department of Economics.
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