Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098333 | Journal of Economic Dynamics and Control | 2015 | 17 Pages |
Abstract
This study examines the quantitative properties of optimal sustainable monetary policies using a monetary model with a stabilization bias. As in Kurozumi (2008), the optimal sustainable policy is a strategy considered in the absence of commitment technologies; however it is implemented following an optimal quasi-sustainable policy derived by assuming that the commitment technologies are present. This study finds that solving for the policy function of the optimal quasi-sustainable policy yields a result basically identical to the Ramsey-optimal commitment policy under a set of parameters commonly used in the literature. The simulation shows two further results: policymakers have incentive to deviate from the Ramsey-optimal commitment policy when the lagged output gap is large and the optimal quasi-sustainable policy endogenously diminishes the steadfastness of policymakers׳ commitment.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Takeki Sunakawa,