Credible monetary policy with private government preferences
نویسندگان
چکیده
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 for computing the set of credible equilibrium payoffs. We use this algorithm to explore the idea that incomplete information monetary policy games of this kind have fewer equilibria and less indeterminacy than their complete information counterparts.
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On Credible Monetary Policy and Private Government Information
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