This Paper explores the relationship between the Kydland-Prescott Barro-Gordon model and models with asymmetric policy preferences. While both yield an inflation bias, recession aversion dampens the output effects of contractionary supply shocks. Some inflation may therefore reflect policy preferences.
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Citation
Gerlach, S (2003), “DP3687 Recession Aversion, Output and the Kydland-Prescott Barro-Gordon Model”, CEPR Press Discussion Paper No. 3687. https://cepr.org/publications/dp3687















