Conservative Central Banks: How Conservative Should a Central Bank Be?

Andrew Hughes Hallett, Lorian D. Proske

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › peer review

Resumé

Using Rogoff's, 1985 model, we determine how inflation averse a central banker should be, given the level of volatility and projected output gap in the economy. We confirm a strong degree of conservatism, almost twice what society would have chosen. But, for a range of developing countries and the OECD, economies that systematically experience higher levels of output volatility would do best to hire a central banker who is more inflation averse than society, but less so than in stable developed economies. Thus, while a conservative central banker remains desirable, the trade‐off is with output volatility rather than with the output gap itself.
Using Rogoff's, 1985 model, we determine how inflation averse a central banker should be, given the level of volatility and projected output gap in the economy. We confirm a strong degree of conservatism, almost twice what society would have chosen. But, for a range of developing countries and the OECD, economies that systematically experience higher levels of output volatility would do best to hire a central banker who is more inflation averse than society, but less so than in stable developed economies. Thus, while a conservative central banker remains desirable, the trade‐off is with output volatility rather than with the output gap itself.
SprogEngelsk
TidsskriftScottish Journal of Political Economy
Vol/bind65
Udgave nummer1
Sider97-104
Antal sider8
ISSN0036-9292
DOI
StatusUdgivet - feb. 2018

Citer dette

Hallett, Andrew Hughes ; Proske, Lorian D./ Conservative Central Banks : How Conservative Should a Central Bank Be?. I: Scottish Journal of Political Economy. 2018 ; Bind 65, Nr. 1. s. 97-104
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Hallett, AH & Proske, LD 2018, 'Conservative Central Banks: How Conservative Should a Central Bank Be?' Scottish Journal of Political Economy, bind 65, nr. 1, s. 97-104. DOI: 10.1111/sjpe.12149

Conservative Central Banks : How Conservative Should a Central Bank Be? / Hallett, Andrew Hughes ; Proske, Lorian D.

I: Scottish Journal of Political Economy, Bind 65, Nr. 1, 02.2018, s. 97-104.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › peer review

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Hallett AH, Proske LD. Conservative Central Banks: How Conservative Should a Central Bank Be? Scottish Journal of Political Economy. 2018 feb;65(1):97-104. Tilgængelig fra, DOI: 10.1111/sjpe.12149

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