News Shocks and Optimal Simple Rules

This paper evaluates the performance of optimal simple policy rules in the presence of news shocks. It is shown that the inclusion of forward-looking elements enhances the performance of simple optimized interest rate rules when agents learn about future disturbances in advance. We provide a rationale for this result by demonstrating that, if shocks are news shocks, the optimal unrestricted control rule under commitment contains as a basic principle a forward-looking element.

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Year of publication:	2010
Authors:	Wohltmann, Hans-Werner ; Winkler, Roland C.
Publisher:	Frankfurt a. M. : Verein für Socialpolitik
Subject:	News Shocks \| Optimal Simple Rules \| Optimal Monetary Policy

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Series:	Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Advances of New Keynesian Macroeconomics ; G2-V3
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Conference Paper
Language:	English
Other identifiers:	654888914 [GVK] hdl:10419/37341 [Handle]
Classification:	E32 - Business Fluctuations; Cycles ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies
Source:	EconStor

Persistent link: https://www.econbiz.de/10010270182