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Can we Identify Economic Policies Stabilizing an Unstable Economy ?
[Peut-on identifier les politiques économiques stabilisant une économie instable ?]

Author

Listed:
  • Kirsten Ralf

    (Ecole Supérieure du Commerce Extérieur - ESCE - International business school)

  • Jean-Bernard Chatelain

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper shows that rules of optimal policy under commitment allow policymakers to lean against bubbles and to stabilize an unstable economy. In this framework, policymakers anchor the initial values of the expectations of the private sector. Then, this paper sets identification conditions for the parameters of optimal rules under commitment, of optimal and time consistent rules and of quasi-optimal rules. Finally, the paper concludes by presenting the pros and cons for each of these three types of policy rules for macroeconomic modelling, depending on a set of criteria.

Suggested Citation

  • Kirsten Ralf & Jean-Bernard Chatelain, 2014. "Can we Identify Economic Policies Stabilizing an Unstable Economy ? [Peut-on identifier les politiques économiques stabilisant une économie instable ?]," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01305362, HAL.
    • Handle: RePEc:hal:cesptp:hal-01305362
    DOI: 10.3917/rfe.143.0143
    Note: View the original document on HAL open archive server: https://hal.science/hal-01305362
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