Delegating optimal monetary policy inertia - Archive ouverte HAL
Article Dans Une Revue Journal of Economic Dynamics and Control Année : 2014

Delegating optimal monetary policy inertia

Résumé

In a forward-looking business cycle model, central banks can achieve the (timeless)optimal commitment equilibrium even in the absence of a commitment technology, if they are delegated with an objective function that is different from the societal one. The paper develops a general linear-quadratic method to solve for the optimal delegation parameters that generate the optimal amount of inertia in a Markov-perfect equilibrium, and studies the optimal design of some policy regimes that are nested within this framework: the (squared) optimal targeting rule; inflation, output-gap growth and nominal income growth targeting; and inflation and output-gap contracts.
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Dates et versions

hal-01162224 , version 1 (09-06-2015)

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Florin Bilbiie. Delegating optimal monetary policy inertia. Journal of Economic Dynamics and Control, 2014, 48, pp.63-78. ⟨10.1016/j.jedc.2014.08.019⟩. ⟨hal-01162224⟩
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