Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support

The Optimal Degree of Commitment to an Intermediate Monetary Target

Kenneth Rogoff
The Quarterly Journal of Economics
Vol. 100, No. 4 (Nov., 1985), pp. 1169-1189
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/1885679
Page Count: 21
  • Get Access
  • Download ($42.00)
  • Cite this Item
If you need an accessible version of this item please contact JSTOR User Support
The Optimal Degree of Commitment to an Intermediate Monetary Target
Preview not available

Abstract

Society can sometimes make itself better off by appointing a central banker who does not share the social objective function, but instead places "too large" a weight on inflation-rate stabilization relative to employment stabilization. Although having such an agent head the central bank reduces the time-consistent rate of inflation, it suboptimally raises the variance of employment when supply shocks are large. Using an envelope theorem, we show that the ideal agent places a large, but finite, weight on inflation. The analysis also provides a new framework for choosing among alternative intermediate monetary targets.

Page Thumbnails

  • Thumbnail: Page 
[1169]
    [1169]
  • Thumbnail: Page 
1170
    1170
  • Thumbnail: Page 
1171
    1171
  • Thumbnail: Page 
1172
    1172
  • Thumbnail: Page 
1173
    1173
  • Thumbnail: Page 
1174
    1174
  • Thumbnail: Page 
1175
    1175
  • Thumbnail: Page 
1176
    1176
  • Thumbnail: Page 
1177
    1177
  • Thumbnail: Page 
1178
    1178
  • Thumbnail: Page 
1179
    1179
  • Thumbnail: Page 
1180
    1180
  • Thumbnail: Page 
1181
    1181
  • Thumbnail: Page 
1182
    1182
  • Thumbnail: Page 
1183
    1183
  • Thumbnail: Page 
1184
    1184
  • Thumbnail: Page 
1185
    1185
  • Thumbnail: Page 
1186
    1186
  • Thumbnail: Page 
1187
    1187
  • Thumbnail: Page 
1188
    1188
  • Thumbnail: Page 
1189
    1189