On two notions of imperfect credibility in optimal monetary policies

Ippei Fujiwara, Timothy Kam, Takeki Sunakawa

    Research output: Contribution to journalArticle

    Abstract

    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 similar to each other.
    Original languageEnglish
    Pages (from-to)22-25
    JournalEconomics Letters
    Volume174
    DOIs
    Publication statusPublished - 2019

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