A central bank is usually assigned two functions: the control of inflation and the maintenance of a safety-banking sector. What are the precise conditions under which trigger strategies from the private sector can solve the time inconsistency problem and induce the central bank to choose zero inflation under a nonstationary natural rate? Can an optimal contract be used together with reputation forces to implement a desired socially optimal monetary policy rule? How to design a truth-telling contract to control the risk taking behaviors of the bank? My dissertation attempts to deal with these issues using three primary methodologies: monetary economics, game theory and optimal stochastic control theory.
A dissertation submitted to the Office of Graduate Studies of Texas A&M University in partial fulfillment of the requirements for the degree of Doctor of Philosophy.
Accepted Author Manuscript
Li, J. (2004). Essays on monetary policy and banking regulation (Doctoral dissertation, Texas A&M University).