Common Agency With Rational Expectations : Theory and Application to A Monetary Union  

Oleh:

Dixit, Avinash ; Jensen, Henrik

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 113 no. 489 (2003), page 539-549.
Topik: MONETARY; common agency; rational expectations; application; monetary union
Fulltext: 539.pdf (98.53KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.11 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We extend the theory of common agency to the situation where the principals' payoffs are affected by their ex ante expectations of the agent's ex post choice. We show how the usual truthful schedules must be modified to account for the rational expectations constraint. We apply the model to a monetary union where member governments influence the policy of the common central bank using incentive contracts. We examine how the outcomes depend on different delegated objectives of the bank, and find that some often - advocated rules create an excessive deflationary bias.

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