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Time consistency of optimal plans: an elementary primer

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  • Michael J. Stutzer

Abstract

Time consistent optimal plans are defined within the context of a simple, discrete time optimal control framework. Three possible sources of inconsistency are identified and discussed with reference to the literature.

Suggested Citation

  • Michael J. Stutzer, 1984. "Time consistency of optimal plans: an elementary primer," Staff Report 91, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmsr:91
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    File URL: http://www.minneapolisfed.org/research/common/pub_detail.cfm?pb_autonum_id=372
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    File URL: http://minneapolisfed.org/research/sr/sr91.pdf
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    References listed on IDEAS

    as
    1. Calvo, Guillermo A, 1978. "On the Time Consistency of Optimal Policy in a Monetary Economy," Econometrica, Econometric Society, vol. 46(6), pages 1411-1428, November.
    2. H. Stuart Burness, 1976. "A Note on Consistent Naive Intertemporal Decision Making and an Application to the Case of Uncertain Lifetime," Review of Economic Studies, Oxford University Press, vol. 43(3), pages 547-549.
    3. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation for Research in Economics, Yale University.
    4. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
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    Cited by:

    1. Kehoe, Patrick J., 1987. "Coordination of fiscal policies in a world economy," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 349-376, May.

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