Barro-Gordon revisited: Reputational equilibria with inferential expectations

Vol: 
29/2010
Author name: 
Henckel T
Menzies GD
Prokhovnik N
Zizzo DJ
Year: 
2010
Month: 
October
Abstract: 

We incorporate inferential expectations into the Barro-Gordon model (1983a) of time inconsistency and consider reputational equilibria. The range of sustainable equilibria shrinks as the private sector becomes more belief-conservative.

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