The importance of the nominal anchor
Concept Introduction:
Time Inconsistency Gap: It is a situation in which a decision-maker's preferences change over time in such a way that a preference can become inconsistent at another point in time.
Explanation of Solution
A nominal anchor is a single variable or a device that is used by the Central Bank to influence the economy’s expectation of the nominal
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Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)
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