<P> Traditional theories suggest that inflationary bias will exist when monetary and fiscal policy is discretionary rather than rule based . Others have suggested that the inflationary bias exists even when policy makers do not have the goal of a lower than natural rate of employment, and their policies are based on rules . </P> <P> Because of the dangers of inflationary bias, several measures have been suggested to prevent it . It has been proposed that states should have conservative central bankers . It has even been suggested that states should create inflationary goals, and if this inflation rate is exceeded, there should be some form of punishment for the central banker . </P> <Ul> <Li> Kydland - Prescott Model </Li> </Ul> <Li> Kydland - Prescott Model </Li>

Two things tempt governments to enact inflationary policies