Dynamic Rawlsian Policy
A well-known time-inconsistency problem hinders optimal decision-making when policymakers are constrained in their pesent choices by expectations of future outcomes. The time-inconsistency problem is caused by differences in the preferences of policymakers who exist at different points in time. Adapting the arguments of Rawls (1971), we propose that these differences can be eliminated if policy is set from behind a 'veil of ignorance', without knowledge of when the policy will be implemented. We set up a well-defined choice problem that captures this normative perspective. The policies that it generates have a number of appealing properties.
|Date of creation:||01 Mar 2012|
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- Tatiana Damjanovic & Vladislav Damjanovic & Charles Nolan, 2007.
"Unconditionally Optimal Monetary Policy,"
CDMA Working Paper Series
200721, Centre for Dynamic Macroeconomic Analysis.
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NBER Working Papers
9419, National Bureau of Economic Research, Inc.
- Andrew P. Blake & Tatiana Kirsanova, 2012.
"Discretionary Policy and Multiple Equilibria in LQ RE Models,"
Review of Economic Studies,
Oxford University Press, vol. 79(4), pages 1309-1339.
- Tatiana Kirsanova & Andrew P. Blake, 2010. "Discretionary Policy and Multiple Equilibria in LQ RE Models," 2010 Meeting Papers 789, Society for Economic Dynamics.
- Andrew Blake & Tatiana Kirsanova, 2008. "Discretionary Policy and Multiple Equilibria in LQ RE Models," Discussion Papers 0813, Exeter University, Department of Economics.
- Blake, Andrew P. & Kirsanova, Tatiana, 2006. "Discretionary Policy and Multiple Equilibria in LQ RE Models," MPRA Paper 21901, University Library of Munich, Germany, revised 01 Apr 2010.
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