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http://hdl.handle.net/10419/25513
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| Title: | | Robustly optimal monetary policy with near-rational expectations  |
| Authors: | | Woodford, Michael |
| Issue Date: | | 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 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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