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On two notions of imperfect credibility in optimal monetary policies

Fujiwara, Ippei; Kam, Timothy; Sunakawa, Takeki


We explore how outcomes of optimal monetary policy with loose commitment (Schaumburg and Tambalotti, 2007; Debortoli and Nunes, 2010) with the non-reoptimization probability of can be interpretable as outcomes of deeper optimal policy under sustainable plans (Chari and Kehoe, 1990) with -period punishment. In a standard monetary-policy framework, we show that, for any sufficiently high value of , there exists an integer such that impulse responses to the cost-push shock under each policy are...[Show more]

CollectionsANU Research Publications
Date published: 2018-10-17
Type: Journal article
Source: Economics Letters
DOI: 10.1016/j.econlet.2018.10.010
Access Rights: Open Access


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