Discretion vs. timeless perspective under model-consistent stabilization objectives

•We explore situations in which discretion may be superior to timeless perspective.•We use a loss function obtained as a second-order approximation of households' utility.•Most of the deep parameters in the slope of the supply schedule also affect the welfare function.•Within this setting timeless perspective consistently results as the superior policy.

Recent literature has reported situations in which discretion dominates timeless perspective in the presence of elements that reduce the slope of the New Keynesian Phillips curve. Considering a model-consistent welfare metric inhibits this mechanism in the standard New Keynesian framework.