Ordering Policy Rules with an Unconditional Welfare Measure

Damjanovic, T.; Damjanovic, V.; Nolan, C.

Ordering Policy Rules with an Unconditional Welfare Measure

Damjanovic, T.; Damjanovic, V.; Nolan, C.

Authors

Professor Tatiana Damjanovic tatiana.damjanovic@durham.ac.uk
Professor

V. Damjanovic

C. Nolan

Abstract

The unconditional expectation of social welfare is often used to assess alternative macroeconomic policy rules in applied quantitative research. This paper provides a detailed analysis of such policies. It sets out the unconditionally optimal (UO) policy problem and derives a linear-quadratic (LQ) version of that problem that approximates the exact non-linear problem. The properties of UO policies are analyzed through a series of examples and contrasted with the timeless perspective (TP), exposited in Benigno and Woodford (2012). Some substantive implications for optimal monetary policy are explored.

Citation

Damjanovic, T., Damjanovic, V., & Nolan, C. (2015). Ordering Policy Rules with an Unconditional Welfare Measure. International journal of central banking, 11(1), 103-149

Journal Article Type	Article
Online Publication Date	Jan 31, 2015
Publication Date	Jan 1, 2015
Deposit Date	Apr 15, 2015
Publicly Available Date	Nov 14, 2017
Journal	International Journal of Central Banking
Print ISSN	1815-4654
Electronic ISSN	1815-7556
Publisher	Association of the International Journal of Central Banking
Peer Reviewed	Peer Reviewed
Volume	11
Issue	1
Pages	103-149
Public URL	https://durham-repository.worktribe.com/output/1443149
Publisher URL	http://www.ijcb.org/journal/ijcb15q1a4.htm