function under commitment. We consider two alternative specifications for the loss function. The first specification includes … we are faced with the time-inconsistency problem under commitment, we initialize our estimates by considering a presample …

function under commitment. We consider two alternative specifications for the loss function. The first specification includes … we are faced with the time-inconsistency problem under commitment, we initialize our estimates by considering a presample …

busts in asset prices or (iii) to implement optimal commitment policies. …

function under commitment. We consider two alternative specifications for the loss function. The first specification includes … we are faced with the time-inconsistency problem under commitment, we initialize our estimates by considering a presample …

This paper proposes a method and a toolkit for solving optimal policy with imperfect commitment in linear quadratic … monetary policy. We apply our method to the Smets and Wouters (2007) model, where we show that imperfect commitment has … relevant implications for the interest rate setting, the sources of business cycle fluctuations, and welfare. …

-looking. Specifically, optimal monetary policy under commitment is associated with a determinate REE that is stable under learning, whereas …, under discretion, the central bank has to be sufficiently inflation averse for the equilibrium to have these properties. …

the case under discretion. We conduct numerical analyses to assess the welfare gains from commitment and from having … optimal monetary and fiscal policies under commitment and discretion. With symmetric rigidities, fiscal policy will not be … curves featuring public spending and mark-up shocks. We derive the second-order welfare loss approximation and characterize …

-looking. Specifically, optimal monetary policy under commitment is associated with a determinate REE that is stable under learning, whereas …, under discretion, the central bank has to be sufficiently inflation averse for the equilibrium to have these properties. …

We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with … the reverse. Under discretion, we show that the economy will not necessarily tend to the Friedman Rule, as Obstfeld found …. Instead it may tend to the critical debt level at which there is no cheating incentive under commitment, and inflation and …

. Second, we show that the commitment (time inconsistent) solution does not normally involve zero inflation and output at its …, we show that the timeless perspective policy has the same steady state as the commitment case, but without any short …