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Loose Commitment In Medium-Scale Macroeconomic Models: Theory And Applications

Debortoli, D, Maih, J and Praca Cavaco Nunes, Ricardo (2014) Loose Commitment In Medium-Scale Macroeconomic Models: Theory And Applications Macroeconomic Dynamics, 18 (1). pp. 175-198.

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Abstract

This paper proposes a method and a toolkit for solving optimal policy with imperfect commitment. As opposed to the existing literature, our method can be employed in the medium- and large-scale models typically used in monetary policy. We apply our method to the Smets and Wouters model [American Economic Review 97(3), 586–606 (2007)], for which we show that imperfect commitment has relevant implications for interest rate setting, the sources of business cycle fluctuations, and welfare.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
NameEmailORCID
Debortoli, DUNSPECIFIEDUNSPECIFIED
Maih, JUNSPECIFIEDUNSPECIFIED
Praca Cavaco Nunes, Ricardoricardo.nunes@surrey.ac.ukUNSPECIFIED
Date : 2014
Identification Number : 10.1017/S1365100512000326
Copyright Disclaimer : © Cambridge University Press 2012
Depositing User : Melanie Hughes
Date Deposited : 10 Oct 2017 16:42
Last Modified : 10 Oct 2017 16:42
URI: http://epubs.surrey.ac.uk/id/eprint/842499

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