When Should Central Bankers Be Fired?
نویسنده
چکیده
In recent years, a number of countries have changed their central banking institutions. Often these reforms involve granting long terms of office to central bankers. This threatens to limit the extent to which the central bank can be held accountability. Dismissal rules can help ensure accountability, and, in the presence of inßation shocks, the socially optimal commitment policy is supported by a dismissal rule similar to a modiÞed nominal income rule. The governments promise to follow the rule is shown to be credible in a trigger strategy equilibrium for reasonable parameter values.
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