Linear-Quadratic Approximation to Unconditionally Optimal Policy : The Distorted Steady-State

This paper establishes that one can generally obtain a purely quadratic approximation to the unconditional expectation of social welfare when the steady-state is distorted. A specific example is provided employing a canonical New Keynesian model. Unlike in the non-distorted steady state case, the approximate loss function is not defined simply over terms in inflation and output. Furthermore, optimal steady state inflation and the nominal interest rate are positive

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Year of publication:	2008
Authors:	Damjanovic, Tatiana ; Damjanovic, Vladislav ; Nolan, Charles
Publisher:	[S.l.] : SSRN
Subject:	Theorie \| Theory \| Soziale Wohlfahrtsfunktion \| Social welfare function \| Geldpolitik \| Monetary policy \| Neoklassisches Wachstumsmodell \| Neoclassical growth model \| Neoklassische Synthese \| Neoclassical synthesis

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Extent:	1 Online-Ressource (32 p)
Series:	CDMA Working Paper ; No. 0804
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 2008 erstellt
Other identifiers:	10.2139/ssrn.1112088 [DOI]
Classification:	E20 - Consumption, Saving, Production, Employment, and Investment. General ; E32 - Business Fluctuations; Cycles ; F32 - Current Account Adjustment; Short-Term Capital Movements ; F41 - Open Economy Macroeconomics
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10014219400