Dynamic Rawlsian Policy
AbstractA well-known time-inconsistency problem hinders optimal decision-making when policymakers are constrained in their pesent choices by expectations of future outcomes.� The time-inconsistency problem is caused by differences in the preferences of policymakers who exist at different points in time.� Adapting the arguments of Rawls (1971), we propose that these differences can be eliminated if policy is set from behind a 'veil of ignorance', without knowledge of when the policy will be implemented.� We set up a well-defined choice problem that captures this normative perspective.� The policies that it generates have a number of appealing properties.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 595.
Date of creation: 01 Mar 2012
Date of revision:
Macroeconomic policy; Rawls; Time inconsistency; Veil of ignorance;
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
- NEP-MAC-2012-03-21 (Macroeconomics)
- NEP-MIC-2012-03-21 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tatiana Kirsanova & Andrew P. Blake, 2010.
"Discretionary Policy and Multiple Equilibria in LQ RE Models,"
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- Andrew P. Blake & Tatiana Kirsanova, 2012. "Discretionary Policy and Multiple Equilibria in LQ RE Models," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1309-1339.
- Blake, Andrew P. & Kirsanova, Tatiana, 2006. "Discretionary Policy and Multiple Equilibria in LQ RE Models," MPRA Paper 21901, University Library of Munich, Germany, revised 01 Apr 2010.
- Andrew Blake & Tatiana Kirsanova, 2008. "Discretionary Policy and Multiple Equilibria in LQ RE Models," Discussion Papers 0813, Exeter University, Department of Economics.
- Damjanovic, Tatiana & Damjanovic, Vladislav & Nolan, Charles, 2008.
"Unconditionally optimal monetary policy,"
Journal of Monetary Economics,
Elsevier, vol. 55(3), pages 491-500, April.
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