Optimal contracts for central bankers

Article Abstract:

The determination of how a central banker's incentives should be formed to produce a socially optimal policy is done by adopting a principal-agent standpoint. The inflation bias of discretionary policy is removed and the optimal incentive contract achieves an optimal response to shocks. This is in contrast to recent findings employing ad hoc targeting rules. The one-period model shows that the optimal contract binds the central banker's rewards to realized inflation.

Analysis, Contracts, Central banks, Incentives (Business)

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Risk and uncertainty in monetary policy

Article Abstract:

The development trends of monetary policy in the past fifteen years in the United States are examined. The role of monetary policy in bringing price stability and controlling inflation is analyzed.

United States, Forecasts, trends, outlooks, Management dynamics, Management, Forecasts and trends, Inflation (Finance), Market trend/market analysis, Control, Company business management, Price control, Price regulations, Inflation (Economics)

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