EconPapers    
Economics at your fingertips  
 

Optimal Policy with Partial Information in a Forward-Looking Model: Certainty-Equivalence Redux

Lars Svensson () and Michael Woodford ()

No 9430, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper proves a certainty equivalence result for optimal policy under commitment with symmetric partial information about the state of the economy in a model with forward-looking variables. This result is used in our previous paper, Indicator Variables for Optimal Policy,' which synthesizes what is known about the case of symmetric partial information, and derives useful general formulas for computation of the optimal policy response coefficients and efficient estimates of the state of the economy in the context of a fairly general forward-looking rational-expectations model. In particular, our proof takes into account that, under commitment, the policymaker can affect the future evolution of the observable variables, and thereby potentially affect the future information available.

JEL-codes: E37 E47 (search for similar items in EconPapers)
Date: 2003-01
New Economics Papers: this item is included in nep-mon
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
http://www.nber.org/papers/w9430.pdf (application/pdf)

Related works:
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:nbr:nberwo:9430

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9430

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2021-08-30
Handle: RePEc:nbr:nberwo:9430