| 来源类型 | Discussion paper
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| 规范类型 | 论文
|
| 来源ID | DP767
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| DP767 Time-inconsistency, Democracy and Optimal Contingent Rules |
| Patrick Minford
|
| 发表日期 | 1993-02-28
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| 出版年 | 1993
|
| 语种 | 英语
|
| 摘要 | Following Kydland and Prescott's (1977) seminal paper on time-inconsistency, a large literature has explored possible frameworks within which monetary policy could overcome this problem -- neatly illustrated in Barro and Gordon's (1983) model. In a stochastic world there appears to be a trade-off between the necessary `tying of hands' to conquer the effects of time-inconsistency and the desirability of flexible response. It is in principle possible to achieve an optimal outcome by use of a discriminatory punishment, however, with a large punishment (sufficient to deter) for using policy to exploit the Phillips curve to reduce unemployment below the natural rate, but no punishment for contingent response to shocks using the same Phillips curve. This paper sets out a model of democratic elections in which floating voters may find it optimal to follow this strategy. The significance of this possibility is that regimes which permit contingent macroeconomic policy responses, while enabling prior targets to be set and policed, are superior to those which do not. This has relevance to the debate over the Exchange Rate Mechanism and the European Monetary Union. |
| 主题 | International Macroeconomics
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| 关键词 | Discriminatory punishment
Elections
Monitoring
Rules versus discretion
Time inconsistency
Tying of hands
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| URL | https://cepr.org/publications/dp767
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| 来源智库 | Centre for Economic Policy Research (United Kingdom)
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/529920
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推荐引用方式
GB/T 7714 |
Patrick Minford. DP767 Time-inconsistency, Democracy and Optimal Contingent Rules. 1993.
|
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