ANNOUNCEMENTS AND CREDIBILITY OF MONETARY-POLICY

Authors
SCHULTZ C
Citation
C. Schultz, ANNOUNCEMENTS AND CREDIBILITY OF MONETARY-POLICY, Oxford Economic Papers, 48(4), 1996, pp. 673-680
Citations number
11
Categorie Soggetti
Economics
Journal title
Oxford Economic Papers → ACNP
ISSN journal
00307653
Volume
48
Issue
4
Year of publication
1996
Pages
673 - 680
Database
ISI
SICI code
0030-7653(1996)48:4<673:AACOM>2.0.ZU;2-O
Abstract
An infinitely repeated monetary policy game a la Barro and Gordon is c onsidered. Before the game starts the government announces a policy ru le. If there is a slight probability that government is honest and a s light probability that the government makes mistakes, then a sufficien tly patient government will have average loss close to its commitment loss in all sequentially rational equilibria of the infinitely repeate d game.