On two notions of imperfect credibility in optimal monetary policies

Ippei Fujiwara, Timothy Kam, Takeki Sunakawa

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We explore how outcomes of optimal monetary policy with loose commitment (Schaumburg and Tambalotti, 2007; Debortoli and Nunes, 2010) with the non-reoptimization probability of [Formula presented] can be interpretable as outcomes of deeper optimal policy under sustainable plans (Chari and Kehoe, 1990) with [Formula presented]-period punishment. In a standard monetary-policy framework, we show that, for any sufficiently high value of [Formula presented], there exists an integer [Formula presented] such that impulse responses to the cost-push shock under each policy are similar to each other.

Original languageEnglish
Pages (from-to)22-25
Number of pages4
JournalEconomics Letters
Volume174
DOIs
Publication statusPublished - 2019 Jan

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Keywords

  • Imperfect credibility
  • Monetary policy
  • Sustainable policy

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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