SFB 303 Discussion Paper No. B - 148

Author: Schmidt, Roland
Title: The Unique Rule in the Barro-Gordon Framework
Abstract: This paper investigates the importance of monetary rules in the multiperiod setting of Barro and Gordon (1983). If the policymaker wants to reduce unemployment under the natural rate and this objective is common knowledge, inflation results but no employment gain. Unlike Barro and Gordon noted, no monetary rule can bring the inflation rate under the discretionary one. Finally, we generalize this result to a situation of incomplete information.
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Creation-Date: May 1990
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