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Barro-Gordon Model
A model in macroeconomic theory used to explain the time inconsistency problem in monetary policy, which can be applied to understanding similar issues in strategic settings.
Implications
An economic model that explains the relationship between inflation and unemployment, particularly focusing on the time-inconsistency problem in policy-making.
Example
Example: A government uses the Barro-Gordon model to understand the potential inflationary impact of reducing unemployment through expansionary fiscal policies.
Related Terms
Different from Phillips Curve, which shows a direct trade-off between inflation and unemployment, the Barro-Gordon model incorporates expectations and policy credibility.
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