search query: @indexterm GOVERNMENT CONTRACTING / total: 34
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| Author: | Lockwood, B. |
| Title: | State-Contingent Inflation Contracts and Unemployment Persistence |
| Journal: | Journal of Money, Credit and Banking
1997 : AUG, Vol. 29:3, p. 286-299 |
| Index terms: | INFLATION UNEMPLOYMENT GOVERNMENT CONTRACTING |
| Language: | eng |
| Abstract: | This paper shows that if unemployment (or some other real variable) follows a dynamic autoregressive process, the government can still achieve its precommitment outcome in monetary policy , by offering the central banker a linear inflation contract where the penalty for incremental inflation depends positively on lagged unemployment. This note therefore offers an extension of recent results of Walsh to the case of persistence in real economic variables such as output or unemployment. |
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