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Unconditionally Optimal Ramsey policy

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

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Authors

V. Damjanovic

C. Nolan



Abstract

We discuss a time invariant policy which delivers the unconditionally optimal outcomes in purely forward-looking models and Ramsey outcomes in purely backward-looking models. This policy is a product of interaction between two institutions with distinct responsibilities. Motivated by Brendon and Ellison (2015), we think of them as arms of government. One institution is responsible for forward guidance, setting rules which are necessary and su¢ cient to determine private expectations. The second institution implements optimal policy taking expectations as given. The forward guidance rules are designed to maximise the unconditional expectation of the social objectives.

Citation

Damjanovic, T., Damjanovic, V., & Nolan, C. (2017). Unconditionally Optimal Ramsey policy

Publication Date Jan 1, 2017
Deposit Date Jun 4, 2019
Publicly Available Date Mar 28, 2024
Series Title Centre for economic growth and policy working papers
Public URL https://durham-repository.worktribe.com/output/1167555

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