A Timeless Perspective on Optimality in Forward-Looking Rational Expectations Models

Andrew Blake

No 188, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: This paper discusses the `timeless perspective' optimisation concept with reference to a much-studied forward-looking rational expectations model. We establish that this policy, as usually described, is not always superior to a time consistent alternative on the basis of the stochastic equilibrium. We derive an alternative `timelessly optimal' rule which is globally optimal with respect to the unconditional variance and is therefore more supportable as a time consistent equilibrium.

Date: 2001-10
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Working Paper: A 'Timeless Perspective' on Optimality in Forward-Looking Rational Expectations Models (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:188

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