Econometrica Vol. 46 No. 6 1978
On the Time Consistency of Optimal Policy in a Monetary Economy
Abstract
[We study the time consistency of optimal monetary policy in a framework akin to the one in [12, Ch. 1] but we assume away lump sum taxation--all taxes are distortionary. Our major result is that under perfect foresight (as defined in [8, 23]) optimal monetary policy is bound to be time inconsistent. The paper is closely related to the previous works of Auernheimer [2], and Kydland and Prescott [15].]
- DOI
- 10.2307/1913836
- Volume
- 46
- Issue
- 6
- Pages
- 1411
- Sources
- bibtex:phds-export.bib crossref openalex