There is a considerable academic literature on the relationship between Central Bank independence and inflation but the issue of Central Bank accountability and its effect of inflation performance has received very little attention. This paper looks at the issue of accountability in a simple...

We build a New Keynesian business-cycle model with rich household heterogeneity. A central feature is that matching frictions render labor-market risk countercyclical and endogenous to monetary policy. Our main result is that a majority of households prefer substantial stabilization of...