When present and past policy is used to learn about policymaking and predict future policy, central banks can exploit this to influence expectations and thereby improve policy without making any commitments. In a sticky-information model of the inflation-output trade-off, we show how the optimal...

In a standard New-Keynesian sticky-price model, we study how the gains from commitment depend on how far ahead policymakers commit. While the traditional time-inconsistent solution assumes a once-and-for-all commitment to a plan for all future periods, we show that most of the gains can be...