Cukierman, Alex; Gerlach, Stefan - C.E.P.R. Discussion Papers - 2003
The Kydland-Prescott, Barro-Gordon inflation bias result relies on the presumption that policymakers aim at achieving a … of realism. We show that even if policymakers are content with the normal level of employment there is an inflation bias … employment below the normal level than to policy misses leading to employment above it. This new view of the inflation bias …