Journal of Economic Dynamics & Control 31 (2007) 1557–1583 Recursive monetary policy games with incomplete information Christopher Sleet, S - evin Yeltekin à Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA 15213, USA Received 7 February 2003; accepted 11 May 2006 Available online 9 August 2006 Abstract This paper provides recursive methods for analyzing the credible equilibria of an incomplete information monetary policy game. The policy game is one in which a discretionary government has a short-run temptation to engage in a surprise monetary expansion. It also has the opportunity to imitate a government that always implements the ex ante optimal monetary policy actions. We derive an algorithm for computing the set of credible equilibrium payoffs. We use this algorithm to explore the idea that incomplete information monetary policy games of this kind have fewer equilibria and less indeterminacy than their complete information counterparts. r 2006 Elsevier B.V. All rights reserved. JEL classification: C73; D82; E50; E61 Keywords: Monetary policy; Credibility; Private information 1. Introduction This paper considers the credibility of monetary policy in settings in which the government’s attachment to a low monetary growth objective may initially be unknown. We assume two types of government. The first pursues a low monetary ARTICLE IN PRESS www.elsevier.com/locate/jedc 0165-1889/$ - see front matter r 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.jedc.2006.05.006 à Corresponding author. Tel.: +1 412 268 9622; fax: +1 412 268 8163. E-mail address: sevin@andrew.cmu.edu (S - . Yeltekin).