Waller and Walsh (1996) argue that the optimal length of the central banker can exceed one period when the central bank is conservative enough. However, the optimal conservativeness is unlikely to be exogenous. In this note we show how the optimal conservativeness and the optimal term length are...

It has been widely accepted that politically induced variance can be generated when the wage contract is written before an election. In this paper, we show that inflation contracts and inflation targets can eliminate both the inflation bias and politically induced variance, if electoral...