An Analysis of the Impact of Finite Horizons on Macroeconomic Control
Macroeconomic control exercises using large-scale nonlinear consistent expectations models necessarily employ a finite time horizon. By contrast, much of the analytic literature has focused on the linear-quadratic infinite horizon problem, for which closed-form solutions are easy to derive and offer convenient interpretation. This paper examines the extent to which the imposed finite time horizon distorts the optimal policy. The authors compare the effects on the reputational time inconsistent solution with those on time consistent strategies using both a large nonlinear consistent expectations model and a compact linearized version. Copyright 1995 by Royal Economic Society.
Volume (Year): 47 (1995)
Issue (Month): 1 (January)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:47:y:1995:i:1:p:98-116. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.