Expectations, credibility, and time-consistent monetary policy

This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. The author suggests that the problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to that policy even if it imposes short-run costs on the economy.

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Year of publication:	1998
Authors:	Ireland, Peter N.
Institutions:	Federal Reserve Bank of Cleveland
Subject:	Monetary policy \| Rational expectations (Economic theory)

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Extent:	application/pdf
Series:	Working Paper.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 9812
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005729071