Robustly optimal monetary policy with near-rational expectations
- The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private-sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs that are close enough to model-consistency. It is found that commitment continues to be important for optimal policy, that the optimal long-run inflation target is unaffected by the degree of potential distortion of beliefs, and that optimal policy is even more history-dependent than if rational expectations are assumed. JEL Classification: E52, E58, E42
| Author: | Michael Woodford |
|---|---|
| URN: | urn:nbn:de:hebis:30-38229 |
| Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,12 |
| Series (Serial Number): | CFS working paper series (2007, 12) |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2005 |
| Year of first Publication: | 2005 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2007/02/23 |
| Tag: | Commitment; History-Dependent Policy; Optimal Monetary Policy |
| GND Keyword: | Geldpolitik |
| Issue: | December 13, 2005 |
| Page Number: | 50 |
| HeBIS-PPN: | 190113529 |
| Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
