Optimal Forward Guidance
| Autor: | Florin Ovidiu Bilbiie |
|---|---|
| Rok vydání: | 2019 |
| Předmět: | |
| Zdroj: | American Economic Journal: Macroeconomics. 11:310-345 |
| ISSN: | 1945-7715 1945-7707 |
| DOI: | 10.1257/mac.20170335 |
| Popis: | Optimal forward guidance is the simple policy of keeping interest rates low for some optimally determined number of periods after the liquidity trap ends and moving to normal-times optimal policy thereafter. I solve for the optimal duration in closed form in a new Keynesian model and show that it is close to fully optimal Ramsey policy. The simple rule “announce a duration of half of the trap’s duration times the disruption” is a good approximation, including in a medium-scale dynamic stochastic general equilibrium (DSGE) model. By anchoring expectations of Delphic agents (who mistake commitment for bad news), the simple rule is also often welfare-preferable to Odyssean commitment. (JEL D84, E12, E43, E52, E56) |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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