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

Andrew Blake

No 30, Royal Economic Society Annual Conference 2002 from Royal Economic Society

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: 2002-08-29
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Working Paper: A Timeless Perspective on Optimality in Forward-Looking Rational Expectations Models (2001)
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