Monetary policy, credibility and central bank constitutions
San Miguel, Olga Arratibel (1996) Monetary policy, credibility and central bank constitutions. PhD thesis, University of Warwick.
WRAP_THESIS_SanMiguel_1996.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Official URL: http://webcat.warwick.ac.uk/record=b1402876~S15
Although most macroeconomists agree that the control of inflation may involve
losses of output, there is no consensus about why.
New Classical economists, focusing on the issue of credibility, have identified incentive
problems as important obstacles to price stability. On the contrary, many
new Keynesians regard credibility problems as secondary. They focus on the microeconomic
details of wage and price adjustments as potential sources of disinflationary
Yet, if the costs and the benefits of anti-inflationary policy are strictly related to
the market structure of the economy, so will be the incentives tempting the monetary
authority to inflate. Indeed, what we show in this thesis is that the microeconomic
aspects of wage and price setting not only affect the costs (benefits) of credible disinflationary
(inflationary) policy, but that they need to be considered to determine
whether those disinflationary (inflationary) policies can be perceived as credible or
Despite the relevance of this problem, the economic analysis of microfoundations
has received little attention at the time of designing efficient resolutions for the credibility
problem of monetary policy. This idea has been illustrated in different ways.
First, Rogoff's idea of delegation does not seem very attractive, if the wage setting
process appears to be dominated by insider workers. Moreover, we have underlined
the difficulties that a country like Spain, with a highly distorted labour market, may
face in fighting inflation.
Second, interesting patterns of inflation and output behaviour may be generated
by the interaction of both credibility problems and staggered wage setting.
Finally, although the difficulties of implementing anti-inflationary policies are emphasised
in all our examples, they are particularly severe when near-rational behaviour
or, alternatively, costs of changing prices are taken into account.
|Item Type:||Thesis or Dissertation (PhD)|
|Subjects:||H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
|Library of Congress Subject Headings (LCSH):||Inflation (Finance), Monetary policy, Banks and banking, Central|
|Official Date:||August 1996|
|Institution:||University of Warwick|
|Theses Department:||Department of Economics|
|Supervisor(s)/Advisor:||Miller, Marcus, 1941- ; Thomas, Jonathan|
|Sponsors:||Universidades e Investigacion del Gobierno Vasco. Departamento de Educacion|
|Extent:||x, 223 p.|
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