Monetary politics and unemployment persistence

• 成果类型: Article
• 署名作者: Jonsson, G
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(97)00015-9
• 发表日期: 1997
• 页码: 303-325
• 关键词: Monetary policy; unemployment persistence; credibility; ELECTIONS

摘要

This paper develops a positive model of monetary policy that allows for persistent unemployment and electoral uncertainty. The common credibility problem associated with low-inflation monetary policy results in both a more severe inflation bias and a stabilization bias. However, a simple state contingent performance contract eliminates both biases. Monetary policy is also subject to two different strategic political considerations: It is used to influence future policy decisions as well as to increase the incumbent party's probability of re-election This results in a political business cycle which, however, is fundamentally different for left-wing and right-wing governments.