Central bank design in general equilibrium

James Bullard and Christopher Waller

No 1998-002, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We study the effects of alternative institutional arrangements for the determination of monetary policy in the context of a capital-theoretic, general equilibrium economy. In the absence of an institutional arrangement, there is a continuum of steady state equilibria indexed by rates of inflation ranging from the Friedman rule to high a high level. The social optimum is associated with the Friedman rule.. We consider three institutional arrangements for determining monetary policy. The first, unconditional majority voting, always leads to a substantial inflation bias. The second, a simple form of bargaining which we interpret as a policy board, generally improves on the unconditional majority voting outcome. Finally, we consider a form of constitutional rule which always achieves the social optimum.

Keywords: Monetary theory; Banks and banking, Central (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Published in Journal of Money, Credit, and Banking, February 2004, 36(1), pp. 95-113

Downloads: (external link)
http://research.stlouisfed.org/wp/more/1998-002 (application/pdf)
http://research.stlouisfed.org/wp/1998/1998-002.pdf

Related works:
Journal Article: Central Bank Design in General Equilibrium (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:1998-002

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Anna Oates ().