The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The...

We analyze credible forward guidance policies in a sticky-price model with an effective lower bound (ELB) constraint on nominal interest rates by solving a series of optimal sustainable policy problems indexed by the duration of reputational loss. Lower-for-longer policies --- while effective in...

We study infant industry protection using a dynamic model in which the industry's cost is initially higher than that of foreign competitors. The industry can stochastically lower its cost via learning by doing. Whether the industry has transitioned to low cost is private information. We use a...

We study the role of expectations of naive agents in a general equilibrium version of the Ramsey model with quasi-hyperbolic discounting. When agents recognize others’ naivete, as strongly suggested by empirical evidence, they revise consumption paths, correctly anticipating prices in a...

I study whether saving behavior reveals socially relevant intertemporal preferences. To this end, I decompose the present generation’s preference for the next into its dynastic and cross-dynastic components in a model of saving. If people are concerned about the next generation as such, then...

In many markets, consumers need to sign advance contracts with upfront fees and usage-based payments. Yet they may value consumptions inconsistently over time. They tend to overconsume temptation goods (e.g., credit cards), but underconsume aversion goods (e.g., gym visits), relative to initial...

Individual’s time preference may be influenced by a variety of factors such as economic conditions. In this paper, we consider the time inconsistent preference triggered by the switches of firm’s profitability state and apply it to the model of dynamic agency and the q theory of investment....

This paper proposes a model of intertemporal preferences where the relative risk aversion depends on the time horizon of the agent. The agent is supposed to evaluate risk in the short run with a relative risk aversion coefficient which differs from its long run value. As preferences are no more...