Costly Information Acquisition and Delegation to a "Liberal" Central Banker

This paper develops a model of monetary policy in which the central banker can acquire costly information about a supply shock. It is shown that, with this assumption, it may be optimal for society to delegate to a "weight-liberal" central banker, a result which contrasts with that of Rogoff (1985). This result points at a limitation of Rogoff's argument. It may also explain why the issue of delegating monetary policy to an independent and "weight-conservative" central banker often is politically controversial