The "conservative central banker" has come under attack recently. Explicitly modeling the interaction of a trade union with monetary policy, it has been argued that the standard solution to the inflationary bias in monetary policy might actually be welfare reducing if the trade union has an...

We develop a model to analyze policymakers’ incentives to install policy rules, comparing the case of no rule with a binding and a contingent policy rule that allows policymakers to suspend the rule in response to a sufficiently large shock. First, abstracting from political polarization, we...

When countries need to implement costly economic policy reforms, these often imply uncertainties about their effectiveness for the homecountry and their spillovers to other countries. We develop a model to show that under these circumstances countries implement too few or too many policy...