TY - JOUR
AU - Muscatelli,, Anton
AB - Abstract This paper examines some problems which arise when monetary policy is delegated to an independent central bank and where the central bank's preferences are unknown. Two key conclusions emerge from the paper. First, even with optimal targets or contracts, central bank independence may not always be desirable because central banks may have distorted preferences relative to society. Second, if the delegation solution is preferable, and the independent central bank responds to information about supply shocks, the central bank may be made more accountable by allowing it to set its own inflation targets, i.e. by making it goal‐independent This content is only available as a PDF. Author notes This paper is a major revision and extension of an earlier paper on uncertain central bank preferences presented at the Warwick Workshop on `Central Bank Independence' in May 1996. I am grateful to Ali Al-Nowaihi, Martin Cripps, Robin Cubitt, Julia Darby, John Drif®ll, Berthold Herrendorf, Haizhou Huang, Mervyn King, Paul Levine, Ben Lockwood, Jim Malley, Marcus Miller, Charles Nolan, Apostolis Philippopoulos, Neil Rankin, Eric Schaling, Andrew Stevenson, Lars Svensson, Patrizio Tirelli, Yanis Varoufakis, Carl Walsh, Tony Yates and two anonymous referees for very helpful comments on this and earlier material. © Royal Economic Society 1998
TI - Optimal Inflation Contracts and Inflation Targets with Uncertain Central Bank Preferences: Accountability Through Independence?
JF - The Economic Journal
DO - 10.1111/1468-0297.00302
DA - 1998-03-01
UR - https://www.deepdyve.com/lp/oxford-university-press/optimal-inflation-contracts-and-inflation-targets-with-uncertain-0e0ys9d1c2
SP - 529
EP - 542
VL - 108
IS - 447
DP - DeepDyve
ER -