The delegation and targets of central bankers

This paper analyses the complex problem of the delegation of central banker s from the point of view of modern economic theory. The core of the theoret ical approach is the retrieval of the authorities' lass functions, and the definition of central bank and government reaction functions. The retrieval of this complex function, which is dependent on current and future utility , is not possible from either a theoretical or an empirical point of view. Thus, this function is often approximated by using a relatively simple macr oeconomic welfare function. The care of the central bank delegation is the Barro-Gordon model (1983), the stochastic Version presented by Rogoff (1985 ), the Walsh contracts (Walsh, 1995), and Svensson's inflation targets. The paper concludes by echoing recommendations made by Allan Blinder (1997) re garding the delegation of central bankers and considers the implications of these for the Czech economy.