Aizenman, Joshua (contributor); Glick, Reuven (contributor) - 2005
peg is used as a commitment mechanism to achieve inflation stability, but
multiple equilibria are possible. We show that … there are ex ante large gains from choosing
a more conservative not only in order to mitigate the inflation bias from the … well-known
time inconsistency problem, but also to steer the economy away from the high inflation
equilibria. These gains …