Topic 5: Time Inconsistency

Reading pack available at the usual place:
http://groups.google.com/group/economaru/files The lecture note on the topic has also been uploaded.
*Note that I have also uploaded Bernanke (1983) (file name Topic4_Creditextra.zip), the paper I mentioned will be useful for topic 4 but was not covered in the lectures.

The key readings for topic 5 is
David Romer "Advanced Macroeconomics", chapter "Inflation and Monetary Policy" (chapter 9 in the old edition), sections on dynamic inconsistency.
Barro and Gordon (1983) "Rules, Discretion and Reputation in a Model of Monetary Policy", JME
Kydland and Prescott (1977) "Rules Rather than Discretion: The Inconsistency of Optimal Plans", JPE
Readings are ordered in ascending order of difficulty, so read the first one first.