Kydland and Prescott first identified the inflationary bias that results when a central bank does not precommit to a monetary policy rule. Subsequent work, published over the past twenty five years, demonstrates that this inflationary bias can be minimized by appointing central bankers whose preferences or incentives differ systematically from those of society as a whole. Subsequent work also s...

This paper purports to apply the Kydland-Prescott framework of dynamic inconsistency to the case of fiscal policy, by considering the trade-off between output and debt stabilization. The Government budget constraint provides the link between debt dynamics and the level of activity, influenced by fiscal policy. Contrary to what happens in the monetary policy framework, however, a commitment is n...

In this paper we pursue an approach based on economic theory to illustrate possible shortcomings of widely used detrending methods. We analyze a simple model of economic growth and business cycles in which investment and technical progress are stochastic. The Hodrick-Prescott and the Baxter-King filter are shown to detect spurious business cycles that are not related to actual cycles in the mod...

Most of the results of optimal taxation literature in Ramsey framework are derived under the assumption of commitment. Commitment is usually defined as ability of a government to bind future policy choices. This assumption is restrictive. A government, even a benevolent one, may choose to change its policies from those promised at an earlier date. The first formalization of the notion of time-i...

This paper generalizes the sufficient conditions for stability of monotone economies and time series models due to Hopenhayn and Prescott (Econometrica, 60, p. 1387–1406, 1992). We introduce a new order-theoretic mixing condition and characterize stability for monotone economies satisfying this condition. We also provide a range of results that can be used to verify our mixing condition in appl...

Adequate assessment of solar radiation data is crucial for planning and designing energy systems. However, a major challenge facing technologies the availability at specific area interest. In this paper sunshine duration from 29 stations in Zimbabwe were used to generate both monthly annual Angstrom-Prescott (A-P) type coefficients, b, that are location based. The coefficients developed using l...

abstract comparison of food prices in different periods, indicates fluctuations and continually upward trend. any change in agricultural sector variables, as main food supplier, will affect food price. productivity shocks and production gap are examples of such variables. in this paper ,hodrick prescott and kalman filters are used as generators of productivity shocks and production gap series. ...

This paper describes a framework of how to optimally implement linear filters for finite time series. The filters under consideration have the property that they minimize the mean squared error compared to some ideal hypothetical filter. It is shown in examples that three commonly used filters, the bandpass filter, the Hodrick-Prescott filter and the digital Butterworth filter need to be adjust...