How Severe is the Time-Inconsistency Problem in Monetary Policy?

Alternative Conditions to Time Inconsistency Equilibrium of an International Monetary Policy

Monetary policy rule is an approach to avoid time inconsistency problem as regarded by new classical economist to choose a time plan for policy making in order to maximize households’ well-being. The foundation of time inconsistency problem is not coincidence of expectations as an ex-ante variable, which is expected variable, with actual variable as an ex-post variable. Expectations in Finn K...

How Forward-Looking is Optimal Monetary Policy?

We calculate optimal monetary policy rules for several variants of a simple optimizing model of the monetary transmission mechanism with sticky prices and/or wages. We show that robustly optimal rules can be represented by interest-rate feedback rules that generalize the celebrated proposal of Taylor (1993). Optimal rules, however, require that the current interest-rate operating target depend ...

How Powerful Is Monetary Policy in the Long Run?

The author is a senior economist in the macropolicy section of the Atlanta Fed's research department. He thanks Frank King for comments on an earlier version of this article and Steve Russell for detailed and thoughtful editorial suggestions.

alternative conditions to time inconsistency equilibrium of an international monetary policy

â  monetary policy rule is an approach to avoid time inconsistency problem as regarded by new classical economist to choose a time plan for policy making in order to maximize households’ well-being. the foundation of time inconsistency problem is not coincidence of expectations as an ex-ante variable, which is expected variable, with actual variable as an ex-post variable. expectations in fin...

Time-Varying Monetary Policy Reaction Function: The Case of Iran