Optimal Monetary Policy Rules from a Timeless Perspective

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Optimal Monetary Policy Rules from a Timeless Perspective

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Tatiana Damjanovic ()
Vladislav Damjanovic ()
Charles Nolan ()

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Abstract

The timelessly optimal monetary policy proposed by Woodford (2003) may be dominated by alternative timeless policies. We provide a formal justification for these alternative policies. We demonstrate why discount rates do not matter and establish that optimizing over the unconditional expectation of the policy criterion function recovers these alternative strategies.

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Paper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Working Paper Series with number 0510.

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Date of creation: Oct 2005
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Handle: RePEc:san:cdmawp:0510

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Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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-2005-10-15 (All new papers)
NEP-CBA-2005-10-15 (Central Banking)
NEP-MAC-2005-10-15 (Macroeconomics)
NEP-MON-2005-10-15 (Monetary Economics)

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Other versions:
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Other versions:
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Other versions:
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Other versions:
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