TY - JOUR
T1 - On two notions of imperfect credibility in optimal monetary policies
AU - Fujiwara, Ippei
AU - Kam, Timothy
AU - Sunakawa, Takeki
N1 - Publisher Copyright:
© 2018 Elsevier B.V.
PY - 2019/1
Y1 - 2019/1
N2 - 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.
AB - 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.
KW - Imperfect credibility
KW - Monetary policy
KW - Sustainable policy
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U2 - 10.1016/j.econlet.2018.10.010
DO - 10.1016/j.econlet.2018.10.010
M3 - Article
AN - SCOPUS:85058453203
SN - 0165-1765
VL - 174
SP - 22
EP - 25
JO - Economics Letters
JF - Economics Letters
ER -