Valencia, Fabian; Ueda, Kenichi - International Monetary Fund (IMF) - 2012
and monetary policy. When a central bank is in charge of price and financial stability, a new time inconsistency problem … may arise. Ex-ante, the central bank chooses the socially optimal level of inflation. Ex-post, however, the central bank … central bank is politically independent. We then consider the role of political pressures in the spirit of Barro and Gordon …