Anderson, Gary S.; Kim, Jinill; Yun, Tack - In: Journal of Economic Dynamics and Control 34 (2010) 9, pp. 1572-1581
Since Kydland and Prescott (1977) and Barro and Gordon (1983), most studies of the problem of the inflation bias associated with discretionary monetary policy have assumed a quadratic loss function. We depart from the conventional linear-quadratic approach in favor of a projection method...