Transparent rules for deposing central bankers

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dc.contributor.author Arayssi, Mahmoud en_US
dc.date.accessioned 2016-05-19T13:04:48Z en_US
dc.date.available 2016-05-19T13:04:48Z en_US
dc.date.copyright 2015 en_US
dc.date.issued 2016-05-19
dc.identifier.issn 1059-0560 en_US
dc.identifier.uri http://hdl.handle.net/10725/3852 en_US
dc.description.abstract I model flexible targeting with linear and quadratic loss function in the output gap and inflation rate. I find a form of targeting with one-sided dismissal rules attractive; it discourages the central banker from inflating and minimizes the probability of its dismissal in the presence of aggregate supply shocks. This procedure ties the central banker's performance to observable policy targets, whether the nominal output or the inflation rate, and gives some valuable flexibility in terms of stabilization of shocks Two cases of targeting procedures, nominal output targeting and inflation targeting, are compared to the full discretionary case without any dismissal rule. The central banker, accountable to hit the policy target, implements a dominant policy whenever she takes a hawkish stance against inflation, and targets the variable that is most affected by the unobservable supply shock. This type of reappointment contract implies that monetary policy would become fully transparent, consistently more credible and more effective than the discretionary case without dismissal. en_US
dc.language.iso en en_US
dc.title Transparent rules for deposing central bankers en_US
dc.type Article en_US
dc.description.version Published en_US
dc.author.school SOB en_US
dc.author.idnumber 199629330 en_US
dc.author.department Department of Finance and Accounting (FINA) en_US
dc.description.embargo N/A en_US
dc.relation.journal International Review of Economics & Finance en_US
dc.journal.volume 38 en_US
dc.article.pages 1-17 en_US
dc.keywords Game theory en_US
dc.keywords Nominal output targeting en_US
dc.keywords Inflation targeting en_US
dc.keywords Full discretion en_US
dc.keywords Dismissal rule en_US
dc.identifier.doi http://dx.doi.org/10.1016/j.iref.2015.01.005 en_US
dc.identifier.ctation Arayssi, M. (2015). Transparent rules for deposing central bankers. International Review of Economics & Finance, 38, 1-17. en_US
dc.author.email mahmoud.araissi@lau.edu.lb en_US
dc.identifier.tou http://libraries.lau.edu.lb/research/laur/terms-of-use/articles.php en_US
dc.identifier.url http://www.sciencedirect.com/science/article/pii/S1059056015000118 en_US
dc.orcid.id https://orcid.org/0000-0002-1816-8835 en_US

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