State-contingent Inflation Contracts and Output Persistence

This paper shows that the government can achieve its precommitment outcome in monetary policy when output follows an autoregressive process, by offering the central banker a linear inflation contract, and where the parameters of the contract depend on lagged output. This note therefore offers an extension of the recent results of Walsh to the case of persistence in real economic variables such as output or unemployment

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Year of publication:	1996-03
Authors:	Lockwood, Ben
Institutions:	C.E.P.R. Discussion Papers
Subject:	Inflation Contracts \| Monetary Policy \| Output Persistence

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Extent:	application/pdf
Series:	CEPR Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 1348
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005789212