Refereed Articles
Monetary Policy and Central Bank Independence under Endogenous Preferences
Michael Berlemann, Andrea Schneider (2014),
Journal of Economic Research 19(2), 125-136.
Journal of Economic Research 19(2), 125-136.
In this paper we study the effects of monetary policy under endogenous conservatism. We find a feedback mechanism of macroeconomic outcomes on policy conservatism to destabilize the economy or at least to contribute to considerable adjustment costs. Central bank independence turns out to be a suitable solution to this problem.