A primer on optimal policy projections

Thomas Dengler, Rafael Gerke, Sebastian Giesen, Daniel Kienzler, Joost Röttger, Alexander Scheer, Johannes Wacks

Optimal policy projections (OPPs) offer a flexible way to derive scenario-based policy recommendations. This note describes how to calculate OPPs for a simple textbook New Keynesian model and provides illustrations for various examples. It also demonstrates the versatility of the approach by showing OPP results for simulations conducted using a medium-scale DSGE model and a New Keynesian model with heterogeneous households.

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Year of publication:	[2024]
Authors:	Dengler, Thomas ; Gerke, Rafael ; Giesen, Sebastian ; Kienzler, Daniel ; Röttger, Joost ; Scheer, Alexander ; Wacks, Johannes
Publisher:	Frankfurt am Main : Deutsche Bundesbank
Subject:	Optimal monetary policy \| macroeconomic projections \| New Keynesian models \| household heterogeneity \| Geldpolitik \| Monetary policy \| Theorie \| Theory \| Neoklassische Synthese \| Neoclassical synthesis