The article shows the optimal monetary policy problem in three different cases. The first is optimization "under discretion". This means that a central bank can reoptimize its behaviour each period and is not history dependent. The second approach is optimization "under commitment" which means...

The paper deals with a baseline New Keynesian DSGE model for a closed economy. The model follows the concept of the New Open Economy Macroeconomics based on microeconomic foundations enriched with real and nominal rigidities. It is estimated with Bayesian technique using quarterly Eurozone data....