The objectives of this paper are: first, to quantify the stabilization welfare gains from commitment; second, to … examine how commitment to an optimal rule can be sustained as an equilibrium and third, to find a simple interest rate rule … that closely approximates the optimal commitment one. We utilize an influential empirical micro-founded DSGE model, the …

This paper sets out first, to quantify the stabilization gains from commitment in terms of household welfare and second …, to examine how commitment to an optimal or approximately optimal rule can be sustained as an equilibrium in which … commitment -- as much as a $5-6\%$ permanent increase in consumption. We also find that a simple optimized commitment rule with …

policy rules and commitment strategies, typically absent under discretion. But when a policymaker has some private … information - as is the case in reality - belief management becomes an integral part of optimal discretion policies, too. Solving …

policy rules and commitment strategies, typically absent under discretion. But when a policymaker has some private … information - as is the case in reality - belief management becomes an integral part of optimal discretion policies, too. Solving …