Template-Type:ReDIF-Paper 1.0  
Title: Society, Government, and Central-Bank Independence
Author-Name: Neumann, Manfred J. M.
Classification-JEL:C72, E58
Keywords:Inflation, time-inconsistency, central-bank independence
Abstract:This paper reexamines the inflation bias of time-inconsistent monetary policy. A benevolent government
	can eliminate the bias by using two policy instruments, instead of one. However, the time-inconstistency result can be
	kept formally, provided a non-benevolent government has the private interest of preserving the level of distortionary
	regulation and of collecting the inflation tax. Such government has no use for normative solutions of the inflation
	problem. The paper also presents a positive theory of central-bank independence. Goal independence should be difined
	as the right for bankers of choosing target values. On the hypothesis that the bakers; non-pecuniary payoff depends on
	expected inflation, they will deliver zero inflation.
Length: pages
Creation-Date: 1995-12
Revision-Date: 
Handle: RePEc:bon:bonsfb:338