Optimal accommodation by strong policymakers under incomplete information *

@inproceedings{Cukierman2001OptimalAB,
  title={Optimal accommodation by strong policymakers under incomplete information *},
  author={A. R. Cukierman and Nissan Liviatan},
  year={2001}
}
This paper examines the optimal behavior of a policymaker who is able to precommit (labelled ‘strong’) when the public entertains the possibility that he is either strong or weak (unable to precommit). The main result is that, in the presence of doubts about their type, it is optimal, even for strong policymakers, to partially accommodate inflationary expectations. This contrasts with Vickers (1986) who finds that when strength is conceived in terms of the relative concern for employment the… CONTINUE READING

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