Optimal Monetary Policy Under Bounded Rationality
Jonathan Benchimol and
Lahcen Bounader
No 336, Globalization Institute Working Papers from Federal Reserve Bank of Dallas
Abstract:
Optimal monetary policy under discretion, commitment, and optimal simple rules regimes is analyzed through a behavioral New Keynesian model. Flexible price level targeting dominates under discretion; flexible inflation targeting dominates under commitment; and strict price level targeting dominates when using optimal simple rules. Stabilizing properties and bounded rationality-independence generally affect the regime's optimality. The policymaker's knowledge of an agent's myopia is decisive, whereas bounded rationality is not necessarily associated with decreased welfare. Several forms of economic inattention can be welfare increasing.
JEL-codes: C53 D01 D11 E37 E52 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2018-01-01
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://www.dallasfed.org/~/media/documents/institute/wpapers/2018/0336.pdf Full text (application/pdf)
Related works:
Journal Article: Optimal monetary policy under bounded rationality (2023) 
Working Paper: Optimal monetary policy under bounded rationality (2023) 
Working Paper: Optimal Monetary Policy Under Bounded Rationality (2021) 
Working Paper: Optimal Monetary Policy under Bounded Rationality (2019) 
Working Paper: Optimal Monetary Policy Under Bounded Rationality (2019) 
Working Paper: Optimal monetary policy under bounded rationality (2018) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:336
DOI: 10.24149/gwp336
Access Statistics for this paper
More papers in Globalization Institute Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().