Optimal policy in rational-expectations models: new solution algorithms

Richard Dennis

No 2001-09, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: This paper develops algorithms that solve for optimal discretionary and optimal pre-commitment policies in rational-expectations models. The techniques developed are simpler to apply than existing methods; they do not require identifying and separating predetermined variables from jump variables, and they eliminate many of the mathematical preliminaries that are required to implement existing methods. The techniques developed are applied to examples to assess the benefits of pre-commitment over discretion.

Keywords: Monetary policy; Rational expectations (Economic theory) (search for similar items in EconPapers)
Date: 2001
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Related works:
Journal Article: OPTIMAL POLICY IN RATIONAL EXPECTATIONS MODELS: NEW SOLUTION ALGORITHMS (2007)
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