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 provides a stylized choice-thoretic model to analyze optimal monetary policies among interdependent economies. In response to marcoeconomic shocks, policymakers strike a balance between two objectives. The first is to stabilize marginal costs and markups to offset the distortions...

When a policymaker is better informed than the public, public beliefs about the hidden informationemerge as additional state variables, managed by the policymaker. General methodsare presented to compute optimal commitment and discretion policies.Under commitment, policy is additive in two...

Monetary policy is most effective when public beliefs about future policies are activelymanaged. This is the appeal of policy rules and commitment strategies, typically absent underdiscretion. But when a policymaker has some private information — as is the case in reality— belief management...