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2016-12-07Diskussionspapier DOI: 10.18452/18451
Central Bank Reputation, Cheap Talk and Transparency as Substitutes for Commitment
dc.contributor.authorDuffy, John
dc.contributor.authorHeinemann, Frank
dc.date.accessioned2017-10-09T13:55:36Z
dc.date.available2017-10-09T13:55:36Z
dc.date.issued2016-12-07
dc.identifier.urihttp://edoc.hu-berlin.de/18452/19130
dc.description.abstractWe implement a repeated version of the Barro-Gordon monetary policy game in the laboratory and ask whether reputation serves as a substitute for commitment, enabling the central bank to achieve the efficient Ramsey equilibrium and avoid the inefficient, time-inconsistent one-shot Nash equilibrium. We find that reputation is a poor substitute for commitment. We then explore whether central bank cheap talk, policy transparency, both cheap talk and policy transparency or economic transparency yield improvements in the direction of the Ramsey equilibrium under the discretionary policy regime. Our findings suggest that these mechanisms have only small or transitory effects on welfare. Surprisingly, the real effects of supply shocks are better mitigated by a commitment regime than by any discretionary policy. Thus, we find that there is no trade-off between flexibility and credibility.eng
dc.language.isoeng
dc.publisherHumboldt-Universität zu Berlin
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/
dc.subjectMonetary Policyeng
dc.subjectRepeated Gameseng
dc.subjectCentral Bankingeng
dc.subjectCommitmenteng
dc.subjectDiscretioneng
dc.subjectCheap Talkeng
dc.subjectTransparencyeng
dc.subjectExperimental Economicseng
dc.subject.ddc330 Wirtschaft
dc.titleCentral Bank Reputation, Cheap Talk and Transparency as Substitutes for Commitment
dc.typeworkingPaper
dc.subtitleExperimental Evidence
dc.identifier.urnurn:nbn:de:kobv:11-110-18452/19130-1
dc.identifier.doihttp://dx.doi.org/10.18452/18451
local.edoc.container-titleSonderforschungsbereich 649: Ökonomisches Risiko
local.edoc.pages62
local.edoc.type-nameDiskussionspapier
local.edoc.institutionWirtschaftswissenschaftliche Fakultät
local.edoc.container-typeseries
local.edoc.container-type-nameSchriftenreihe
local.edoc.container-volume2016
local.edoc.container-issue53
local.edoc.container-erstkatid2195055-6

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