Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152459
Authors: 
Schellekens, Philip
Year of Publication: 
2000
Series/Report no.: 
ECB Working Paper 25
Abstract: 
Does society benefit from the delegation of monetary policy to cautious and conservative central bankers? We offer a critical view on the delegation literature and relax seemingly innocuous assumptions about uncertainty and preferences. First, caution improves credibility but does not obviate the need for central-bank conservatism. Second, previous models of delegation have focused on suboptimal forms of conservatism. We derive optimal concepts of conservatism that mitigate, or eliminate, any residual problem of credibility. Third, we rationalize why credible monetary policy may be conducive to stable inflation and output.
JEL: 
E50
Document Type: 
Working Paper

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