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Unconditionally Optimal Ramsey policy

Damjanovic, T.; Damjanovic, V.; Nolanz, C.

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Authors

C. Nolanz



Abstract

We discuss a time invariant policy which delivers the unconditionally optimal outcomes in purely forward-looking models and Ramsey outcomes in purely backward-looking models. This policy is a product of interaction between two institutions with distinct responsibilities. Motivated by Brendon and Ellison (2015), we think of them as arms of government. One institution is responsible for ëforward guidanceí, setting rules which are necessary and su¢ cient to determine private expectations. The second institution implements optimal policy taking expectations as given. The forward guidance rules are designed to maximise the unconditional expectation of the social objectives.

Citation

Damjanovic, T., Damjanovic, V., & Nolanz, C. (2021). Unconditionally Optimal Ramsey policy. Journal of Macroeconomics, 69, Article 103346. https://doi.org/10.1016/j.jmacro.2021.103346

Journal Article Type Article
Acceptance Date Jun 28, 2021
Online Publication Date Jul 16, 2021
Publication Date 2021-09
Deposit Date Jul 12, 2021
Publicly Available Date Jul 16, 2022
Journal Journal of Macroeconomics
Print ISSN 0164-0704
Electronic ISSN 1873-152X
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 69
Article Number 103346
DOI https://doi.org/10.1016/j.jmacro.2021.103346
Public URL https://durham-repository.worktribe.com/output/1245734

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