Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323621 
Year of Publication: 
2020
Citation: 
[Journal:] Revue d'économie politique [ISSN:] 2105-2883 [Volume:] 130 [Issue:] 5 [Publisher:] Dalloz [Place:] Paris [Year:] 2020 [Pages:] 823-846
Publisher: 
Dalloz, Paris
Abstract: 
The aim of the present paper is to provide criteria for a central bank of how to choose among different monetary-policy rules when caring about a number of policy targets such as the output gap and expected inflation. Special attention is given to the question if policy instruments are predetermined or only forward looking. Using the new-Keynesian Phillips curve with a cost-push-shock policy-transmission mechanism, the forward-looking case implies an extreme lack of robustness and of credibility of stabilization policy. The backward-looking case is such that the simple-rule parameters can be the solution of Ramsey optimal policy under limited commitment. As a consequence, we suggest to model explicitly the rational behavior of the policy maker with Ramsey optimal policy, rather than to use simple rules with an ambiguous assumption leading to policy advice that is neither robust nor credible.
Subjects: 
Determinacy
Proportional Feedback Rules
Ramsey Optimal Policy under Quasi-Commitment
Dynamic Stochastic General Equilibrium
JEL: 
B22
B23
C62
E52
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)
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