How severe is the time-inconsistency problem in monetary policy?

This study analyzes two monetary economies, a cash-credit good model and a limited-participation model. In these models, monetary policy is made by a benevolent policymaker who cannot commit to future policies. The study defines and analyzes Markov equilibrium in these economies and shows that there is no time-inconsistency problem for a wide range of parameter values.

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Year of publication:	2003
Authors:	Albanesi, Stefania ; Chari, V. V. ; Christiano, Lawrence J.
Published in:	Quarterly Review. - Federal Reserve Bank of Minneapolis. - 2003, Sum, v. 27, no. 3, p. 17-33
Publisher:	Federal Reserve Bank of Minneapolis
Subject:	Monetary policy \| Inflation (Finance) \| Money supply

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Notes:	Published in Advances in economics and econometrics: Theory and applications> (Vol. 3, 2003, pp. 123-150)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005491112