Question

What is the time-inconsistency/credibility problem? LO5 

    What is the time-inconsistency/credibility problem? LO5
Macroeconomics
Macroeconomics
David Colander 8th Edition
Chapter 12, Problem 13 ↓

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This is typically because the optimal policy in the future becomes inconsistent with the previously announced (or optimal) policy plan. This inconsistency arises because the preferences or incentives of the policy maker change over time, often due to changes in  Show more…

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