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Optimal Implementation Delays: When Should Policies Be Announced?

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  • Christian Jensen

Abstract

While a delay between the publication and implementation of a policy can make the time‐consistent solution capture the expectational effects that make commitment superior to discretion, this comes at the cost of a suboptimal present‐period policy. This cost is larger the longer the delay, and the more extreme the prevailing conditions, making the optimal duration of an implementation delay vary over time as initial conditions change. Therefore, we integrate over these to choose the implementation delay that will do best on average. The optimal delay is usually of intermediate length, balancing commitment gains with the loss of responsiveness to contemporary needs.

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  • Christian Jensen, 2007. "Optimal Implementation Delays: When Should Policies Be Announced?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 492-507, September.
    • Handle: RePEc:bla:scotjp:v:54:y:2007:i:4:p:492-507
    DOI: 10.1111/j.1467-9485.2007.00426.x
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    References listed on IDEAS

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    1. Currie,David & Levine,Paul, 2009. "Rules, Reputation and Macroeconomic Policy Coordination," Cambridge Books, Cambridge University Press, number 9780521104609.
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    Cited by:

    1. Beckmann, Klaus, 2007. "Jon Elster und das Zeitinkonsistenz-Problem," Discussion Papers 2007-21, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.

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