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Montserrat Ferre and Carolina Manzano
''Designing the optimal conservativeness of the central bank''
( 2012, Vol. 32 No.2 )
We propose an indicator of the degree of conservativeness of an independent central bank and we derive its optimal social value. We show that from a normative perspective, one can either design a central bank that cares about public spending or that it does not -but in the latter case the optimal weight on output stabilization would have to be higher and the central bank would be less conservative in the Rogoff sense.
Keywords: Central bank, conservativeness, independence.
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
Manuscript Received : Mar 21 2012 Manuscript Accepted : May 15 2012

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