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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Bibliographic Details
Published in:MAGKS - Joint Discussion Paper Series in Economics (Band 01-2010)
Main Authors: Hefeker, Carsten, Zimmer, Blandine
Format: Work
Published: Philipps-Universität Marburg 2010
Online Access:PDF Full Text
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MAGKS - Joint Discussion Paper Series in Economics