This note focuses on the role of the planning horizon in monetary policy games. We analyze the case of an uncertain horizon of the monetary policy game that has not been considered, yet. In addition to that we will - different from the basic Barro-Gordon-model - assume a quadratic loss function...

We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models. We use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different discrete modes in a Markov chain, and by taking...