This paper explores robust optimal targeting rules in a standard forward looking model when i) policy maker has doubts about the parameters while private agents know the model and ii) policy maker and the private sector share the same doubts. It is shown that, while the robust optimal policy...

In the standard forward-looking models of the recent literature, theoretical optimal monetary policy rules imply much higher inertia of interest rates than estimated historical policy rules. Motivated by the observation that theoretical policy rules often assume perfect commitment on the part of...

This paper investigates the changing behavior of inflation expectations in response to the macroeconomic and policy environment. Using a panel of professional forecasters covering thirteen years of inflation targeting period from Turkey, we present evidence on the behavioral shifts in the...

In the conventional optimal monetary policy framework, two key assumptions underline the full commitment solution: Monetary authority is perfectly credible, and can commit for an infinite number of periods. Using a baseline forward looking model, this study explores the implications of relaxing...