Optimal contracts for central bankers
Article Abstract:
The determination of how a central banker's incentives should be formed to produce a socially optimal policy is done by adopting a principal-agent standpoint. The inflation bias of discretionary policy is removed and the optimal incentive contract achieves an optimal response to shocks. This is in contrast to recent findings employing ad hoc targeting rules. The one-period model shows that the optimal contract binds the central banker's rewards to realized inflation.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1995
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Risk and uncertainty in monetary policy
Article Abstract:
The development trends of monetary policy in the past fifteen years in the United States are examined. The role of monetary policy in bringing price stability and controlling inflation is analyzed.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 2004
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