Comment on 'Market discipline and monetary policy' by Carl Walsh

This paper shows that the results Walsh (2000, Market disciplineand monetary policy, Oxford Economic Papers, 52, 249–71)obtains are highly sensitive to the assumption that differentwage contracts are based on different information sets eventhough they are negotiated simultaneously. In particular, thepower of future expectations to discipline an opportunisticcentral banker is much weaker when homogeneous information setsare used.