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Indicator Variables for Optimal Policy / Lars E.O. Svensson, Michael Woodford.
- Format:
- Book
- Author/Creator:
- Svensson, Lars E.O.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w7953.
- NBER working paper series no. w7953
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2000.
- Summary:
- The optimal weights on indicators in models with partial information about the state of the economy and forward-looking variables are derived and interpreted, both for equilibria under discretion and under commitment. An example of optimal monetary policy with a partially observable potential output and a forward-looking indicator is examined. The optimal response to the optimal estimate of potential output displays certainty-equivalence, whereas the optimal response to the imperfect observation of output depends on the noise in this observation.
- Notes:
- Print version record
- October 2000.
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