Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25513
Authors: 
Woodford, Michael
Year of Publication: 
2005
Series/Report no.: 
CFS Working Paper 2007/12
Abstract: 
The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private-sector expectations need not be precisely modelconsistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs that are close enough to model-consistency. It is found that commitment continues to be important for optimal policy, that the optimal long-run inflation target is unaffected by the degree of potential distortion of beliefs, and that optimal policy is even more historydependent than if rational expectations are assumed.
Subjects: 
Optimal Monetary Policy
Commitment
History-Dependent Policy
JEL: 
E52
E58
E42
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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