Delegating optimal monetary policy inertia
Article dans une revue: In a forward-looking business cycle model, central banks can achieve the (timeless)optimal commitment equilibrium even in the absence of a commitment technology, if they are delegated with an objective function that is different from the societal one. The paper develops a general linear-quadratic method to solve for the optimal delegation parameters that generate the optimal amount of inertia in a Markov-perfect equilibrium, and studies the optimal design of some policy regimes that are nested within this framework: the (squared) optimal targeting rule; inflation, output-gap growth and nominal income growth targeting; and inflation and output-gap contracts.
Auteur(s)
Florin Bilbiie
Revue
- Journal of Economic Dynamics and Control
Date de publication
- 2014
Mots-clés JEL
Mots-clés
- Discretion and commitment
- Inertia
- Optimal delegation
- Stabilization bias
- Timeless-optimal policy
- Inflation
- Output gap growth
- Nominal income growth targeting
Pages
- 63-78
URL de la notice HAL
Version
- 1
Volume
- 48