Time Inconsistency in Monetary Policy 90 Central Bank's Object 2 ∑ u t+s mn BE +6-+s =0 2 st u - 丌:)+E which yields L+.+ 1+6 Note that this solution deviates from agents' expectation, or equivalently central bank's ex-ante commitment. This is the ne time inconsistent problem found by 4 Kydland-Prescott(1977, JPE)and Barro Gordon(1983, JPE)( ) ( ) t e t t t T s t s t s t s st u u u E       = − − +       + − = + + . . 2 2 min 0 2 2 Central Bank’s Object: which yields     + − + + = 1 t e t t u Note that this solution deviates from agents’ expectation, or equivalently, central bank’s ex-ante commitment. This is the time inconsistent problem found by Kydland-Prescott (1977, JPE) and Barro￾Gordon (1983, JPE). Time Inconsistency in Monetary Policy