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people's preferences over inflation and output it has an incentive to renege from prearranged plans to gain a short run boost … to output. This incentive leads to higher than desired inflation. One solution to this credibility problem is to give … control of monetary policy to an independent central bank that is more averse to inflation than society. Central bank …
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This paper examines the interactions between monetary regimes and public debt management. The analysis shows that delegation of monetary policy to an independent central bank is more effective in containing inflationary expectations than the use of foreign currency or price-indexed debt. If...
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