Optimal Inflation Targets, 'Conservative' Central Banks, and Linear Inflation Contracts: Comment

摘要

In an earlier article in this Review, Lars E.O. Svensson (1997) shows that state- Contingent inflation targeting induces an in- Dependent and "conservative" (in the sense Of Kenneth Rogoff, 1985) central bank to fol- Low the optimal monetary policy rule when Employment is persistent. In this Comment We argue that the state-contingent nature of the Delegation scheme may undermine its credi- Bility. Subsequently we show that it neverthe- Less is possible to attain the optimal rule in Svensson's model through state-in dependent Delegation.