Huang, Haizhou; Padilla, A. Jorge - In: Annals of Economics and Finance 3 (2002) 1, pp. 27-42
We develop a simple macroeconomic model where the time inconsistency of optimal monetary policy is due to tax distortions. If fiscal policy is exogenously fixed at its optimal level, a Walsh contract (Walsh, 1995) offered to an independent central bank implements the optimal monetary policy....
