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- W3049202200 abstract "In a large class of linear-quadratic models with rational expectations, the commitment solution can be implemented by a policy-maker who acts purely under discretion. To show this, we construct discretionary equilibria with payoff-irrelevant state variables. These additional state variables are constructed in a way such that the policy-maker finds it impossible to renege on past promises. On the equilibrium path, the state variables are identical to the Lagrange multipliers associated with the constraints for the non-predetermined variables in the corresponding commitment problem. We illustrate our approach with the help of the canonical new Keynesian model." @default.
- W3049202200 created "2020-08-21" @default.
- W3049202200 creator A5078542446 @default.
- W3049202200 date "2020-01-01" @default.
- W3049202200 modified "2023-09-23" @default.
- W3049202200 title "Implementing the Commitment Solution via Discretionary Policy-Making" @default.
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- W3049202200 doi "https://doi.org/10.2139/ssrn.3549448" @default.
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