Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/53771
Authors: 
Juillard, Michel
Pelgrin, Florian
Year of Publication: 
2007
Series/Report no.: 
Bank of Canada Working Paper 2007,32
Abstract: 
Since the contribution of Kydland and Prescott (1977), it is well known that the optimal Ramsey policy is time inconsistent. In a series of recent contributions, Woodford (2003) proposes a new methodology to circumvent this problem, namely the timeless perspective solution. However, one main limitation is that it is not yet empirically implementable. In this paper, we develop a new methodology to compute initial values of the Lagrange multipliers in order to implement the timeless-perspective solution. In so doing, we also provide a generalization of the Ramsey and timeless-perspective problems. We apply our results to a small-open economy model in Canada.
Subjects: 
Monetary policy framework
JEL: 
C6
E5
E6
Document Type: 
Working Paper

Files in This Item:
File
Size
361.67 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.