Unconditionally Optimal Monetary Policy

The Naive Central Banker

“…Another branch in this literature is the modern approach provided by the New Keynesian models (e.g. Clarida, Galí, & Gertler, 1999;Damjanovic, Damjanovic, & Nolan, 2008;Sauer, 2010). However, by analysing the behavior of a specific type of central banker, our results are more close to those of Guzzo & Velasco (1999);Jerger (2002); Lippi (2002), which found there is a case for a populist central banker, and Herrendorf & Lockwood (1997); Rogoff (1985), which focus on the behavior of the conservative central banker.…”

Optimal Continuation versus the Timeless Perspective in Monetary Policy

“…6 6 Damjanovic, Damjanovic, and Nolan (2008a) show how optimal unconditional continuation rules can be derived algebraically. …”

Alternative Perspectives on Optimal Public Debt Adjustment

“…Indeed, this has been the perspective taken in the most recent papers on optimal monetary and …scal policy interactions. There is, however, an alternative perspective going back to Taylor (1979) and Whiteman (1986), also used in Rotemberg and Woodford (1997) and Erceg et al (2000) to evaluate alternative policy options, and most recently treated extensively in the context of monetary policy design in Damjanovic et al (2008) and Jensen and McCallum (2010). Whilst constraining the analysis to stationary outcomes, this perspective seeks to identify the policy that is optimal on average for all possible initial conditions in an economy.…”

“…In pursuit of new answers to this question, we introduce the concept of unconditional optimality in the sense of Damjanovic et al (2008) to …scal policy in an otherwise standard New Keynesian economy. The policy we examine is also the optimal continuation policy proposed by Jensen and McCallum (2010), which is the best policy on average for all possible initial conditions in a dynamic economy.…”