1998/03/01 by Anton Muscatelli · 2 citations
Economics, Econometrics and Finance · #Monetary Policy and Economic Impact #Economic theories and models #Fiscal Policies and Political Economy
paper · doi:10.1111/1468-0297.00302
openalex publication_date 1998/03/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
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