We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government's objective … function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize … the inflation bias. Furthermore, the more concerned the government is about the cost of the contract or the less selfish …

's resource restrict his capability to exert effort. We show that the principal finds it best to offer a sharing contract while …

We revisit the optimal-contract approach to the design of monetary institutions, in the light of the Zero Lower Bound … incorporated in the practices of inflation targeting central banks. First, the optimal contract and the implied inflation …