We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with … the reverse. Under discretion, we show that the economy will not necessarily tend to the Friedman Rule, as Obstfeld found …. Instead it may tend to the critical debt level at which there is no cheating incentive under commitment, and inflation and …

better explained as following optimal policy under discretion than under commitment. We estimate policy objectives of both …

, optimal monetary policy under commitment is associated with a determinate rational expectations equilibrium that is stable … under least squares learning for all parameter constellations considered, whereas, under discretion in policy-making, the …

ample evidence for a cost channel, studies that evaluate the welfare gains from monetary policy commitment have so far … welfare gains from monetary policy commitment. I find that there is a robust positive relationship between the size of the … cost channel and welfare gains from monetary policy commitment. Using a version of the new Keynesian model calibrated to …

. Second, we show that the commitment (time inconsistent) solution does not normally involve zero inflation and output at its …, we show that the timeless perspective policy has the same steady state as the commitment case, but without any short …

optimal commitment rule when the discounted sum of the weights the public’s policy-forecasting equation puts on past policy …

, optimal monetary policy under commitment is associated with a determinate rational expectations equilibrium that is stable … under least squares learning for all parameter constellations considered, whereas, under discretion in policy-making, the …

. Second, we show that the commitment (time inconsistent) solution does not normally involve zero inflation and output at its …, we show that the timeless perspective policy has the same steady state as the commitment case, but without any short …

-looking. Specifically, optimal monetary policy under commitment is associated with a determinate REE that is stable under learning, whereas …, under discretion, the central bank has to be sufficiently inflation averse for the equilibrium to have these properties. …