serves as a substitute for commitment, enabling the central bank to achieve the efficient Ramsey equilibrium and avoid the … inefficient, time-inconsistent one-shot Nash equilibrium. We find that reputation is a poor substitute for commitment. We then … better mitigated by a commitment regime than by any discretionary policy. Thus, we find that there is no trade-off between …

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 …

clearly distinguish commitment and discretionary outcomes, and in some cases adopts inappropriate concepts. Second, our … Taylor-type commitment rules that unlike fully optimal rules are easily monitored by the public. …

under discretion. Because the growth rate of money is closely related to the change in the interest rate and he growth of …

losses both under discretion and commitment. We compare the performance of unrestricted optimal rules to the performance of … optimal simple rules. The results indicate that there are considerable gains from commitment over discretion, probably due to … the stabilization bias present under discretion. The lagged variant of the Taylor type of rule that allows for interest …

, which arise if the policy maker acts under pure discretion. We apply a framework developed by Schaumburg and Tambalotti … of expectation traps under limited commitment and identify the minimum degree of commitment which is needed to escape …

central bank conducts policy under discretion as opposed to commitment. Inflation targeting can also reduce the size of the …

degrees of credibility, in which commitment and discretion become special cases of what we call quasi commitment. The monetary … for only 6 quarters is enough to bridge 75% of the welfare gap between discretion and commitment. This seems to justify … policy authority is assumed to formulate optimal commitment plans, to be tempted to renege on them, and to succumb to this …

modes of optimization, termed commitment and discretion. I estimate the model separately under each policy using maximum … commitment model but a more balanced concern relative to inflation and output stability in the discretionary model. …