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- W2000488521 abstract "Abstract Using a New-Keynesian model subject to misspecifications, we examine how the robust monetary policy could be modified by a linear inflation contract when a central bank is opaque about its preference for model robustness. It is shown that a central bank must limit this preference and opacity about it to ensure the dynamic stability of the economy. An optimal inflation contract with a zero penalty rate provides no incentive for a central bank to be opaque. The latter must rebalance the benefit of avoiding very bad outcomes in worst case scenarios and the economic costs due to higher macroeconomic volatility." @default.
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- W2000488521 date "2012-11-01" @default.
- W2000488521 modified "2023-10-18" @default.
- W2000488521 title "Inflation contract, central bank transparency and model uncertainty" @default.
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- W2000488521 doi "https://doi.org/10.1016/j.econmod.2012.06.021" @default.
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