Arbeitspapier
Delegation, time inconsistency and sustainable equilibrium
This paper analyzes the effectiveness of delegation in solving the time inconsistency problem of monetary policy using a microfounded general equilibrium model where delegation and reappointment are explicitly included into the government's strategy. The method of Chari and Kehoe (1990) is applied to characterize the entire set of sustainable outcomes. Countering McCallum's (1995) second fallacy, delegation is able to eliminate the time inconsistency problem, with the commitment policy being sustained under discretion for any intertemporal discount rate.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 2008:15
- Classification
-
Wirtschaft
Monetary Policy
Central Banks and Their Policies
Policy Objectives; Policy Designs and Consistency; Policy Coordination
- Subject
-
Central Bank
Monetary Policy
Institutional Design
Zentralbank
Geldpolitisches Ziel
Zeitkonsistenz
Allgemeines Gleichgewicht
- Event
-
Geistige Schöpfung
- (who)
-
Basso, Henrique S.
- Event
-
Veröffentlichung
- (who)
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Uppsala University, Department of Economics
- (where)
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Uppsala
- (when)
-
2008
- Handle
- URN
-
urn:nbn:se:uu:diva-86982
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Basso, Henrique S.
- Uppsala University, Department of Economics
Time of origin
- 2008
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