Expectation Traps and Monetary Policy Export

@article{citeulike:914241, abstract = {Why is inflation persistently high in some periods and low in others? The reason may be the absence of commitment in monetary policy. In a standard model, absence of commitment leads to multiple equilibria, or expectation traps, even without trigger strategies. In these traps, expectations of high or low inflation lead the public to take defensive actions, which then make accommodating those expectations the optimal monetary policy. Under commitment, the equilibrium is unique and the inflation rate is low on average. This analysis suggests that institutions which promote commitment can prevent high inflation episodes from recurring.}, author = {Albanesi, Stefania and Chari, V. V. and Christiano, Lawrence J.}, citeulike-article-id = {914241}, citeulike-linkout-0 = {http://www.blackwell-synergy.com/doi/abs/10.1111/1467-937X.00264}, citeulike-linkout-1 = {http://dx.doi.org/10.1111/1467-937X.00264}, doi = {10.1111/1467-937X.00264}, journal = {Review of Economic Studies}, keywords = {411-1, monetary\_policy}, number = {4}, pages = {715--741}, posted-at = {2006-10-27 07:28:45}, priority = {2}, title = {Expectation Traps and Monetary Policy}, url = {http://dx.doi.org/10.1111/1467-937X.00264}, volume = {70}, year = {2003} }

TY - JOUR ID - citeulike:914241 L3 - citeulike-article-id:914241 N2 - Why is inflation persistently high in some periods and low in others? The reason may be the absence of commitment in monetary policy. In a standard model, absence of commitment leads to multiple equilibria, or expectation traps, even without trigger strategies. In these traps, expectations of high or low inflation lead the public to take defensive actions, which then make accommodating those expectations the optimal monetary policy. Under commitment, the equilibrium is unique and the inflation rate is low on average. This analysis suggests that institutions which promote commitment can prevent high inflation episodes from recurring. IS - 4 JF - Review of Economic Studies EP - 741 TI - Expectation Traps and Monetary Policy VL - 70 SP - 715 KW - 411-1 KW - monetary_policy AU - Albanesi, Stefania AU - Chari, VV AU - Christiano, Lawrence PY - 2003/// UR - http://dx.doi.org/10.1111/1467-937X.00264 ER -