  This paper brings together divergent approaches to time inconsistency from
macroeconomic policy and behavioural economics. Behavioural discount functions
from behavioural microeconomics are embedded into a game-theoretic analysis of
temptation versus enforcement to construct an encompassing model, nesting
combinations of time consistent and time inconsistent preferences. The analysis
presented in this paper shows that, with hyperbolic/quasihyperbolic
discounting, the enforceable range of inflation targets is narrowed. This
suggests limits to the effectiveness of monetary targets, under certain
conditions. The paper concludes with a discussion of monetary policy
implications, explored specifically in the light of current macroeconomic
policy debates.
