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Title:News Shocks and Optimal Simple Rules PDF Logo
Authors:Wohltmann, Hans-Werner
Winkler, Roland C.
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Advances of New Keynesian Macroeconomics G2-V3
Abstract:This paper evaluates the performance of optimal simple policy rules in the presence of news shocks. It is shown that the inclusion of forward-looking elements enhances the performance of simple optimized interest rate rules when agents learn about future disturbances in advance. We provide a rationale for this result by demonstrating that, if shocks are news shocks, the optimal unrestricted control rule under commitment contains as a basic principle a forward-looking element.
Subjects:News Shocks
Optimal Simple Rules
Optimal Monetary Policy
JEL:E32
E52
E58
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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