(MPC). In our framework, central bank conservatism is required to attenuate the volatility of monetary decisions generated … extra central bank conservatism is required when there is ambiguity about the MPC's true decision rule. …We study how the optimal degree of conservatism relates to decision-making procedures in a Monetary Policy Committee …

The paper develops a communication game that is applied to the question of central bank policy and independence. The … game is about the preferred degree of conservatism of monetary policy and the game setting consists of a principal … (politics), an agent (central bank) and an observer (financial market participants). The extent of the welfare losses depends on …