Optimal Monetary Policy Rules from a Timeless Perspective

The timelessly optimal monetary policy proposed by Woodford (2003) may be dominated by alternative timeless policies. We provide a formal justification for these alternative policies. We demonstrate why discount rates do not matter and establish that optimizing over the unconditional expectation of the policy criterion function recovers these alternative strategies.

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Year of publication:	2005-10-15
Authors:	Damjanovic, Tatiana ; Damjanovic, Vladislav ; Nolan, Charles
Institutions:	Centre for Dynamic Macroeconomic Analysis, University of St. Andrews
Subject:	Time consistency \| unconditional expectation \| timeless perspective \| optimal monetary policy

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Extent:	application/pdf
Series:	CDMA Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 200510
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; E30 - Prices, Business Fluctuations, and Cycles. General ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005696966