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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- Damjanovic, Tatiana & Damjanovic, Vladislav & Nolan, Charles, 2008.
"Unconditionally optimal monetary policy,"
Journal of Monetary Economics,
Elsevier, vol. 55(3), pages 491-500, April.
- Tatiana Kirsanova & Andrew P. Blake, 2010.
"Discretionary Policy and Multiple Equilibria in LQ RE Models,"
2010 Meeting Papers
789, Society for Economic Dynamics.
- 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.
- 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.
- Andrew Blake & Tatiana Kirsanova, 2008. "Discretionary Policy and Multiple Equilibria in LQ RE Models," Discussion Papers 0813, Exeter University, Department of Economics.
- Marc P. Giannoni & Michael Woodford, 2003.
"Optimal Interest-Rate Rules: I. General Theory,"
NBER Working Papers
9419, National Bureau of Economic Research, Inc.
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