There is a considerable academic literature on the relationship between Central Bank independence and inflation but the issue of Central Bank accountability and its effect of inflation performance has received very little attention. This paper looks at the issue of accountability in a simple...

When individuals have private information about their own luck and income, the sharing of idiosyncratic risks is hampered by moral hazard. This friction also affects the optimal sharing of business cycle risks. Optimal allocations restrict the exposure of low wealth agents' consumption to...