Monetary policy with uncertain central bank preferences |
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Authors: | Anne Sibert |
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Affiliation: | a Department of Economics, Birkbeck College, University of London, 7-15 Gresse St., London W1P 2LL, UK b Centre for Economic Policy Research, London, UK |
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Abstract: | This paper considers monetary policy when policy makers’ preferences are private information. I show that in the first period of a two-period term, all policy makers but the least inflation averse inflate less - but respond more to shocks - than if there were no private information. Moderately inflation-averse policy makers may reduce their inflation most. A tendency toward increased conservatism in their second period increases inflation in the first. With T<∞ period terms, inflation depends solely on the policy maker's time left in office. With unchanging preferences and no discounting, inflation is lower the longer he has left. |
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Keywords: | E58 |
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