Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212082 
Authors: 
Year of Publication: 
2007
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 24/2007
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This study shows that an expectations-based optimal policy rule has desirable properties in a standard macroeconomic model incorporating a cost channel for monetary disturbances and inflation rate expectations that are partly backward-looking. Specifically, optimal monetary policy under commitment is associated with a determinate REE that is stable under learning, whereas, under discretion, the central bank has to be sufficiently inflation averse for the equilibrium to have these properties.
Subjects: 
commitment
determinacy
discretion
expectations-based rule
least squares learning
JEL: 
E52
E61
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-397-1
Document Type: 
Working Paper

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