Svensson, Lars E.O., and Michael Woodford (1999), "Implementing Optimal Policy through Inflation-Forecast Targeting," Working Paper. Home/Search Document Details and Download
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Indicator Variables for Optimal Policy - Svensson, Woodford (2000) (1 citation) (Correct)
....(3.3) for t # t 0 ,whereF , G, S, #, # and # are matrices of appropriate dimension, and # t is the vector of the n x Lagrange multiplier of the lower block of (2.1) the equations corresponding to the forward looking variables. Furthermore, # t 0 1 = 0. Woodford [42] and Svensson and Woodford [35] discuss a socially optimal equilibrium in a timeless perspective, which involves a stationary equilibrium corresponding to a commitment made far in the past, corresponding to t 0 # #. Then, 3.1) 3.3) apply for all t #. Here, we consider this stationary equilibrium. Note that (3.3) can ....
....is no longer a linear function of the current estimate of the predetermined variable alone, X t t , but instead depends upon past estimates X t # t # as well. The inertial character of optimal policy that this can result in is illustrated in Woodford [41] and [42] and in Svensson and Woodford [35]. Svensson and Woodford [35] also show that the socially optimal equilibrium can be achieved under discretion, if the intertemporal loss function in period t is 9 modified to equal E t # # #=0 # # L t # # t 1 (x t x t t 1 ) 3.4) That is, the central bank internalizes the cost of ....
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Svensson, Lars E.O., and Michael Woodford (1999a), "Implementing Optimal Policy through Inflation-Forecast Targeting," Working Paper.
Indicator Variables for Optimal Policy - Svensson, Woodford (1999) (1 citation) Self-citation (Lars) (Correct)
....S, #, # and # are matrices of appropriate dimension, and # t is the vector of (the central bank s estimate of) the n x Lagrange multiplier of the lower block of (2.1) the equations corresponding to the forward looking variables. Furthermore, # t 0 1 =0. Woodford [49] and Svensson and Woodford [40] discuss a socially optimal equilibrium in a timeless perspective, which involves a stationary equilibrium corresponding to a commitment made far in the past, corresponding to t 0 # #. Then, 3.1) 3.3) apply for all t #. Here, we consider this stationary equilibrium. Note that (3.3) can ....
....no longer a linear function of the current estimate of the predetermined variable alone, X t t , but instead depends upon past estimates X t # t # as well. The 8 inertial character of optimal policy that this can result in is illustrated in Woodford [48] and [49] and in Svensson and Woodford [40]. Svensson and Woodford [40] also show that the socially optimal equilibrium can be achieved under discretion, if the intertemporal loss function in period t is modified to equal E t # # #=0 # # L t # # t 1 (x t x t t 1 ) 3.4) That is, the central bank internalizes the cost of letting ....
[Article contains additional citation context not shown here]
Svensson, Lars E.O., and Michael Woodford (1999), "Implementing Optimal Policy through Inflation-Forecast Targeting," Working Paper.
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