The Naive Central Banker

Resumo

There has been in some countries a trend of assigning other functions to central banks besides price stability. The most suggested function to be added to monetary authority's obligations is to pursue economic growth or full employment. In this paper we characterize the behavior and analyse the optimal monetary policy of, what we will call, a naive central banker. We describe the naive behavior as one that does face the inflation-unemployment trade-off, but it tries to minimize both variables simultaneously. Our findings, both under discretion and commitment, indicate that the naive central banker delivers lower expected inflation and inflation variance than the benchmark behavior, whenever the economy is rigid enough. However, the degree of conservativeness also affect this result, such that the less conservative the naive policymaker, the more rigidity is necessary.

Ficha do documento

Tipo

Artigo científico

Ano

2015

Instituição

EGV EPGE

Fonte

Revista Brasileira de Economia

Idioma

Português

Acesso

Não informado

Identificador

oai:ojs.periodicos.fgv.br:article/38225

Palavras-chave

naive central bankinflationary biasmonetary policy.