Premium
Costly Information Acquisition and Delegation to a “Liberal” Central Banker
Author(s) -
Lagerlöf Johan
Publication year - 2001
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/1468-0343.00091
Subject(s) - delegate , delegation , argument (complex analysis) , central bank , economics , monetary policy , keynesian economics , law and economics , monetary economics , computer science , management , biochemistry , chemistry , programming language
This paper develops a model of monetary policy in which the central banker can acquire costly information about a supply shock. It is shown that, with this assumption, it may be optimal for society to delegate to a “weight‐liberal” central banker, a result which contrasts with that of Rogoff (1985). This result points at a limitation of Rogoff's argument. It may also explain why the issue of delegating monetary policy to an independent and “weight‐conservative” central banker often is politically controversial.