• Abstract
  • Non-technical summary
  • 1 Introduction
  • 2 The model
  • 2.1 Households v2.2 Firms
  • 2.3 The government
  • 2.4 Equilibrium
  • 2.5 Solution method and model calibration
  • 2.6 Log-linear representation
  • 3 Optimal policy
  • 3.1 Optimal policy under commitment
  • 3.2 Optimal policy with discretion
  • 4 Simple rules
  • 5 Conclusion
  • Figures
  • Appendices
  • References 50European Central Bank Working Paper Series