Abstract
The time inconsistency of optimal policy plans is today’s most popular theoretical explanation for the existence of positive inflation rates. Among academics, incentive mechanisms for central bankers are becoming a very popular solution concept for this particular problem. The appealing feature of incentive mechanisms is that they solve the credibility problem of the central bank without reducing monetary policy flexibility. Gerhard Illing has provided an insightful survey of this recent literature. And he raises a couple of interesting questions for further research. In my comment I want to make some additional skeptical remarks.
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© 1998 Physica-Verlag Heidelberg
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Grüner, HP. (1998). Comment. In: Wagner, H. (eds) Current Issues in Monetary Economics. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-99797-6_4
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DOI: https://doi.org/10.1007/978-3-642-99797-6_4
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