Welfare Implications of Alternative Monetary Policy Rules under Imperfect Information (in Korean)

This paper sets up a canonical new Keynesian model and explores the welfare cost implications of alternative monetary policy rules such as discretion and commitment under imperfect information about key macroeconomic variables. First, welfare gains from commitment relative to discretion decrease as shocks become more persistent and the degree of imperfect transparency increases when there is imperfect information on key economic variables. Second, the paper employing a Bayesian method shows that both cost push shock and technology shock play pivotal roles over the business cycle in Korea. Finally, the Bayesian estimates show that firms in Korea reoptimize their price on average every 6 months.