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Unconditionally optimal monetary policy

  • Damjanovic, Tatiana
  • Damjanovic, Vladislav
  • Nolan, Charles

We develop a simple and intuitive approach for analytically deriving unconditionally optimal (UO) policies, a topic of enduring interest in optimal monetary policy analysis. The approach can be employed in both general linear-quadratic problems and in the underlying non-linear environments. A detailed example is provided using a canonical New Keynesian framework.

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File URL: http://www.sciencedirect.com/science/article/B6VBW-4RMFP3P-2/1/055de66c2965a800535212a21765f3d6
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 55 (2008)
Issue (Month): 3 (April)
Pages: 491-500

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Handle: RePEc:eee:moneco:v:55:y:2008:i:3:p:491-500
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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  1. Schmitt-Grohe, Stephanie & Uribe, Martin, 2007. "Optimal simple and implementable monetary and fiscal rules," Journal of Monetary Economics, Elsevier, vol. 54(6), pages 1702-1725, September.
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  8. Taylor, John B, 1979. "Estimation and Control of a Macroeconomic Model with Rational Expectations," Econometrica, Econometric Society, vol. 47(5), pages 1267-86, September.
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  11. Christian Jensen & Bennett C. McCallum, 2002. "The Non-Optimality of Proposed Monetary Policy Rules Under Timeless-Perspective Commitment," NBER Working Papers 8882, National Bureau of Economic Research, Inc.
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  13. Julio J. Rotemberg & Michael Woodford, 1998. "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy: Expanded Version," NBER Technical Working Papers 0233, National Bureau of Economic Research, Inc.
  14. Tatiana Damjanovic & Charles Nolan, 2006. "Relative Price Distortions and Inflation Persistence," CDMA Working Paper Series 200611, Centre for Dynamic Macroeconomic Analysis.
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