Journal article

The stabilization bias and robust monetary policy delegation


Authors listTillmann, P

Publication year2009

Pages730-734

JournalJournal of Macroeconomics

Volume number31

Issue number4

DOI Linkhttps://doi.org/10.1016/j.jmacro.2008.09.008

PublisherElsevier


Abstract

Discretionary monetary policy suffers from a stabilization bias, whose size is known to be dependent on the degree of shock persistence. This note analyzes the size of this bias and, consequently, the rationale for delegating monetary policy to an inflation-averse central banker, when the economy faces uncertainty about the true degree of shock persistence. We show that the stabilization bias increases if uncertainty becomes larger. Hence, the degree of optimal monetary conservatism increases with the degree of uncertainty.




Citation Styles

Harvard Citation styleTillmann, P. (2009) The stabilization bias and robust monetary policy delegation, Journal of Macroeconomics, 31(4), pp. 730-734. https://doi.org/10.1016/j.jmacro.2008.09.008

APA Citation styleTillmann, P. (2009). The stabilization bias and robust monetary policy delegation. Journal of Macroeconomics. 31(4), 730-734. https://doi.org/10.1016/j.jmacro.2008.09.008


Last updated on 2025-21-05 at 17:12