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

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

This paper revisits the trade-off between central bank indepen- dence 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-off no longer holds. In this case, the optimal combination...

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Veröffentlicht in:MAGKS - Joint Discussion Paper Series in Economics (Band 01-2010)
Autoren: Hefeker, Carsten, Zimmer, Blandine
Format: Arbeit
Sprache:Englisch
Veröffentlicht: Philipps-Universität Marburg 2010
Schlagworte:
Central bank independence
Transparency of monetary policy.
Wirtschaft
Conservatism
Economics
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Beschreibung
Zusammenfassung:This paper revisits the trade-off between central bank indepen- dence 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-off no longer holds. In this case, the optimal combination between independence and conservatism is characterised by complementarity.
Umfang:15 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0031

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