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We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government"s objective function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize the inflation bias. Furthermore, the more concerned...
Persistent link: https://www.econbiz.de/10005312947
We examine the effects of the terms of trade and the expected real interest rate differential on the real exchange rate in small, open, developed economies. We employ cointegration analysis to search for long-term linkages. We find that while both the terms of trade and the expected real...
Persistent link: https://www.econbiz.de/10005276286
This paper considers the contacting approach to central banking in the context of a simple common agency model. The recent literature on optimal contracts suggests that the political principal of the central bank can design the appropriate incentive schemes that remedy for time-inconsistency...
Persistent link: https://www.econbiz.de/10005838948
We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government's objective function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize the inflation bias. That is, a fraction of the...
Persistent link: https://www.econbiz.de/10005838997
Approaching monetary policy as a principal agent problem provides a useful framework for interpreting alternative delegation schemes. In this paper, we consider the effectiveness of central banker incentive schemes when the principal delegates monetary policy through contracts but remains...
Persistent link: https://www.econbiz.de/10005800226
We examine the effects of the terms of trade and the expected real interest rate differential on the real exchange rate in a sample of small open developed economies. We employ cointegration analysis to search for possible long-term linkages. We find that while both the terms of trade and the...
Persistent link: https://www.econbiz.de/10005800248
Persistent link: https://www.econbiz.de/10005884480
Persistent link: https://www.econbiz.de/10006548361
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Persistent link: https://www.econbiz.de/10006554872