Comment on ‘Market discipline and monetary policy’ by Carl Walsh

Comment on ‘Market discipline and monetary policy’ by Carl Walsh

This paper shows that the results Walsh (2000, Market discipline and monetary policy, Oxford Economic Papers, 52, 249–71) obtains are highly sensitive to the assumption that different wage contracts are based on different information sets even though they are negotiated simultaneously. In particular...

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Veröffentlicht in:Oxford economic papers 2005-10, Vol.57 (4), p.732-739
Hauptverfasser: Bugarin, Mauricio S., de Carvalho, Fabia A.
Format: Artikel
Sprache:eng
Schlagworte:
Asymmetric information
Central banking
Central banks
Contract negotiations
Contracts
Economic expectations
Economic growth
Economic models
Economic recessions
Game theory
Inflation
Inflation rates
Monetary models
Monetary policy
Output gaps
Rational expectations
Recessions
Studies
Wage contracts
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Beschreibung
Zusammenfassung:This paper shows that the results Walsh (2000, Market discipline and monetary policy, Oxford Economic Papers, 52, 249–71) obtains are highly sensitive to the assumption that different wage contracts are based on different information sets even though they are negotiated simultaneously. In particular, the power of future expectations to discipline an opportunistic central banker is much weaker when homogeneous information sets are used.
ISSN:0030-7653
1464-3812
DOI:10.1093/oep/gpi033