English, Article, Journal or magazine article edition: Expectations, Credibility, and Time-Consistent Monetary Policy Peter N. Ireland

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Bookmark: http://trove.nla.gov.au/version/74163
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Expectations, Credibility, and Time-Consistent Monetary Policy
Author
  • Peter N. Ireland
Physical Description
  • preprint
Notes
  • This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. It suggests that this problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to the policy even if it imposes short-run costs on the economy. Starting with these restrictions, the paper derives conditions that guarantee the uniqueness of the model's steady state; monetary policy in this unique steady state involves the constant deflation advocated by Milton Friedman.
  • RePEc:nbr:nberwo:7234
  • This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. The author suggests that the problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to that policy even if it imposes short-run costs on the economy.
  • RePEc:fip:fedcwp:9812
  • This paper addresses the problem of multiple equilibria in a model of time-consistent monetary policy. It suggests that this problem originates in the assumption that agents have rational expectations and proposes several alternative restrictions on expectations that allow the monetary authority to build credibility for a disinflationary policy by demonstrating that it will stick to that policy even if it imposes short-run costs on the economy. Starting with these restrictions, the paper derives conditions that guarantee the uniqueness of the model's steady state; monetary policy in this unique steady state involves the constant deflation advocated by Milton Friedman.
  • Time-consistency, Inflation, Credibility, Expectations
  • RePEc:boc:bocoec:425
Language
  • English
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