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Title:Central bank independence and conservatism under uncertainty: Substitutes or complements? PDF Logo
Authors:Hefeker, Carsten
Zimmer, Blandine
Issue Date:2010
Series/Report no.:Joint discussion paper series in economics 01-2010
Abstract:This paper revisits the trade-of between central bank independence and conservatism using a New Keynesian model with uncertainty about the central banker's output gap target. It is shown that when this uncertainty is high, the trade-of no longer holds. In this case, the optimal combination between independence and conservatism is characterised by complementarity.
Subjects:central bank independence
conservatism
transparency of monetary policy
JEL:E52
E58
Document Type:Working Paper
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

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