Arbeitspapier

Central bank independence and conservatism under uncertainty: Substitutes or complements?

to connected objects

The paper examines the optimal combination of central bank independence and conservatism in the presence of uncertain central bank preferences. We develop a model of endogenous monetary policy delegation in which government chooses the central bank's degree of inde-pendence and conservatism so as to minimise society's loss function. We find that the optimal combination between independence and conservatism is not necessarily characterised by substitutability. When uncertainty about the central bank's preferences is high, independence and conservatism can become complements. In this case, giving more independence to the central bank increases the need for conservatism.

Language: Englisch

Bibliographic citation: Series: CESifo Working Paper ; No. 3344

Classification: Wirtschaft
Monetary Policy
Central Banks and Their Policies

Subject: central bank independence
conservatism
transparency
Geldpolitik
Regelgebundene Politik
Zentralbankautonomie
Entscheidung bei Unsicherheit
Staatliche Information
Ungleichgewichtstheorie
Theorie

Event: Geistige Schöpfung

(who): Hefeker, Carsten
Zimmer, Blandine

Event: Veröffentlichung

(who): Center for Economic Studies and ifo Institute (CESifo)

(where): Munich

(when): 2011

Handle: http://hdl.handle.net/10419/46389

Last update: 10.03.2025, 11:42 AM CET

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Object type

Arbeitspapier

Associated

Hefeker, Carsten
Zimmer, Blandine
Center for Economic Studies and ifo Institute (CESifo)

Time of origin

2011

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