Supply-side fiscal policy, conservativeness, and Central Bank trasparency

Ciccarone, Giuseppe and Di Bartolomeo, Giovanni and Marchetti, Enrico (2005) Supply-side fiscal policy, conservativeness, and Central Bank trasparency. Working Paper. Dipartimento di Economia Pubblica, Università di Roma La Sapienza, Roma, Italia.

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Abstract

This paper focuses on the “contingent” view of transparency. By introducing endogenous fiscal policy and labour market distortions, it studies the effects the uncertainty in central bank’s (CB) preferences on the behaviour of wage and fiscal authorities and thus on output and inflation. We consider the problem on both positive and normative perspectives. First, we investigate the effects of a given degree of uncertainty in CB’s preferences on inflation and real output. Second, in line with recent literature, by assuming the possibility that information on CB’s preferences may be an endogenous variable, we study the optimal degree of transparency from the CB’s viewpoint. Although a general analysis is presented, we focus on the case of a small-bounded variance of CB’s preference, i.e. we assume that the CB’s power of affecting information disclosure and influencing private beliefs is limited.

Item Type:	Monograph (Working Paper)
Additional Information:	JEL classification: E58
Uncontrolled Keywords:	Central bank transparency; Communication; Inflation uncertainty
Subjects:	300 Scienze sociali > 330 Economia
Depositing User:	Dipartimento economia e diritto
Date Deposited:	09 Nov 2009
Last Modified:	20 May 2010 12:02
URI:	http://eprints.bice.rm.cnr.it/id/eprint/1142

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