Commentary : How Should Monetary Policy Respond to Shocks While Maintaining Long-Run Price Stability ? — Conceptual Issues

@inproceedings{Svensson1996CommentaryH,
  title={Commentary : How Should Monetary Policy Respond to Shocks While Maintaining Long-Run Price Stability ? — Conceptual Issues},
  author={Lars E. O. Svensson},
  year={1996}
}
I find John Taylor’s review of the mistakes of the past very inspiring, but I am not willing to write off time-consistency problems as easily as he does. In some European countries, strong labor movements seem to have imposed unrealistically high employment goals on fiscal and monetary policy. These movements seem to have done their best to block any reform and deregulation of labor markets and wage setting, which might lower the natural rate of unemployment, and have instead preferred to… CONTINUE READING