Should central bankers discount the future? A note

Juan Paez-Farrell

Economics Letters, 2012, vol. 114, issue 1, 20-22

Abstract: Optimal monetary policy under discretion is analysed in a New Keynesian model with rule of thumb pricing. The paper finds that social welfare increases if the policy maker does not discount the future. The welfare improvement rises with the extent of intrinsic inflation persistence.

Keywords: Optimal monetary policy; Discretion; Rule of thumb; Discount factor (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:1:p:20-22

DOI: 10.1016/j.econlet.2011.08.019

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