Anticipated Alternative Instrument-Rate Paths in Policy Simulations

Stefan Laséen () and Lars Svensson

No 14902, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper specifies a new convenient algorithm to construct policy projections conditional on alternative anticipated policy-rate paths in linearized dynamic stochastic general equilibrium (DSGE) models, such as Ramses, the Riksbank's main DSGE model. Such projections with anticipated policy-rate paths correspond to situations where the central bank transparently announces that it, conditional on current information, plans to implement a particular policy-rate path and where this announced plan for the policy rate is believed and then anticipated by the private sector. The main idea of the algorithm is to include among the predetermined variables (the "state" of the economy) the vector of nonzero means of future shocks to a given policy rule that is required to satisfy the given anticipated policy-rate path.

JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-cba, nep-cmp, nep-ecm, nep-for and nep-mac
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Citations: View citations in EconPapers (5)

Published as “Anticipated Alternative Instrument-Rate Paths in Policy Simulations” (with Stefan Laséen, Sveriges Riksbank), revised May 2011. International Journal of Central Banking 7(3) (2011) 1-35

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Related works:
Working Paper: Anticipated Alternative Instrument-Rate Paths in Policy Simulations (2011)
Working Paper: Anticipated Alternative Instrument-Rate Paths in Policy Simulations (2009)
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