Recent theoretical and empirical work has cast doubt on the hypotheses of a linear Phillips curve and a symmetric quadratic loss function underlying traditional thinking on monetary policy. This paper analyzes the Barro-Gordon optimal monetary policy problem under alternative loss...

What is the impact of changing central bank independence (CBI) on the inflation-output trade-off? This paper introduces the notion of effective CBI and distinguishes its political from its economic effects on the trade-off by analyzing the interaction between the government, the median voter and...