NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Reputation in a Model of Monetary Policy with Incomplete Information

Robert J. Barro

NBER Working Paper No. 1794 (Also Reprint No. r0794)
Issued in 1986
NBER Program(s):   EFG

Previous models of rules versus discretion are extended to include uncertainty about the policymaker's "type." When people observe low inflation, they raise the possibility that the policymaker is committed to low inflation (type 1). This enhancement of reputation gives the uncommitted policymaker (type 2) an incentive to masquerade as the committed type. In the equilibrium the policymaker of type 1 delivers surprisingly low inflation -- with corresponding costs to the economy -- over an extended interval. The type 2 person mimics this outcome for awhile, but shift seventually to high inflation. This high inflation is surprising initially, but subsequently becomes anticipated.

download in pdf format
   (269 K)

download in djvu format
   (206 K)

email paper

This paper is available as PDF (269 K) or DjVu (206 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1794

Published: Barro, Robert J. "Reputation in a Model of Monetary Policy with Incomplete Information." Journal of Monetary Economics, Vol. 17, No. 1, (January 1986) , pp. 3-20.

Users who downloaded this paper also downloaded these:
Barro and Gordon w1079 Rules, Discretion and Reputation in a Model of Monetary Policy
Barro and Gordon w0807 A Positive Theory of Monetary Policy in a Natural-Rate Model
Ball w3529 Time-Consistent Policy and Persistent Changes in Inflation
Alesina Macroeconomics and Politics
Barro w2005 Government Spending, Interest Rates, Prices, and Budget Deficits in the United Kingdom, 1701-1918
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us