Credible communication in dynastic government

Credible Communication in Dynastic Government

This paper examines the mechanics of intertemporal information provision in dynastic governments. It has been suggested that “horizontal accountability,” i.e., a system of governance where cross-checking capabilities lie outside the executive branch, can ensure credible information transmission. The results here suggest a cautious approach to that view. Government is modelled as a dynastic sequ...

Credible monetary policy with private government preferences

This paper provides recursive methods for analyzing the credible equilibria of an incomplete information monetary policy game. The policy game is one in which a discretionary government has a short run temptation to engage in a surprise monetary expansion. It also has the opportunity to mimic a government that is committed to the optimal ex ante monetary policy actions. We derive an algorithm f...

Communication in Dynastic Repeated Games: ‘Whitewashes’ and ‘Coverups’∗

We ask whether communication can directly substitute for memory in dynastic repeated games in which short lived individuals care about the utility of their offspring who replace them in an infinitely repeated game. Each individual is unable to observe what happens before his entry in the game. Past information is therefore conveyed from one cohort to the next by means of communication. When com...

Credible Neologisms in Games of Communication

On Credible Monetary Policy and Private Government Information

Credible and optimal monetary policies are considered in environments in which the government observes a signal that is correlated with the state of the economy. When the signal is public information it is optimal for monetary policy to be conditioned upon it. The extent to which such conditioning should occur when the signal is the private information of the government depends upon the governm...