We study the implications of Fed's new policy framework average inflation targeting (AIT) and its ambiguous communication. The central bank has incentive to deviate from announced AIT implement ex post maximize social welfare. show two motives for communication about horizon over which averages as a result time inconsistency. First, it is optimal announce different horizons depending on state e...

We experimentally study the relationship between time inconsistency, sophistication about and self-commitment. Previous research has interpreted demand for commitment devices as evidence of a time-inconsistent decision-maker. In our laboratory experiment, we attempt to measure directly by way cognitive test. then test hypothesis that people who are both show high capacity take up when offered i...

Monetary policy rule is an approach to avoid time inconsistency problem as regarded by new classical economist to choose a time plan for policy making in order to maximize households’ well-being. The foundation of time inconsistency problem is not coincidence of expectations as an ex-ante variable, which is expected variable, with actual variable as an ex-post variable. Expectations in Finn K...