The paper evaluates the performance of three popular monetary policy rules when the central bank is learning aboutthe parameter values of a simple New Keynesian model. The three policies are: (1) the optimal non-inertial rule; (2)the optimal history-dependent rule; (3) the optimal price-level...

This paper considers the determination of aggregate price level under dispersed information.A Central Bank sets policy in response to its noisy measure of the price level, andeach agent makes its decisions by observing a subset of data. Information revealed to theagents and the bank is...