Levine, Paul; McAdam, Peter; Pearlman, Joseph - Society for Computational Economics - SCE - 2006
This paper sets out first, to quantify the stabilization gains from commitment in terms of household welfare and second …, to examine how commitment to an optimal or approximately optimal rule can be sustained as an equilibrium in which … commitment -- as much as a $5-6\%$ permanent increase in consumption. We also find that a simple optimized commitment rule with …