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

This paper revisits the trade-off 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-off no longer holds. In this case, the optimal combination between independence and conservatism is characterised by complementarity.

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Year of publication:	2010
Authors:	Hefeker, Carsten ; Zimmer, Blandine
Publisher:	Siegen : Universität Siegen, Fakultät III, Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht
Subject:	Geldpolitik \| Regelgebundene Politik \| Zentralbankautonomie \| Entscheidung bei Unsicherheit \| Staatliche Information \| Ungleichgewichtstheorie \| Theorie \| central bank independence \| conservatism \| transparency of monetary policy

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Series:	Volkswirtschaftliche Diskussionsbeiträge ; 140-10
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	622427253 [GVK] hdl:10419/41088 [Handle] RePEc:sie:siegen:140-10 [RePEc]
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies
Source:	EconStor

Persistent link: https://www.econbiz.de/10010271489