Autori
Acocella, Nicola
Hughes Hallett, Andrew

Titolo
Stabilization and expanded commitment: a theory of forward guidance for economies with rational expectations
Periodico
Università degli Studi di Roma "La Sapienza" - Dipartimento di metodi e modelli per l'economia il territorio e la finanza. Working papers
Anno: 2014 - Fascicolo: 132 - Pagina iniziale: 1 - Pagina finale: 15

In this paper we construct a general theory of forward guidance in economic policy making, in order to provide a framework to explain the role and strategic advantages of including forward guidance as an explicit part of policy design. We do this by setting up a general policy problem in which forward guidance plays a role and then examine the consequences for performance when that guidance is withdrawn. Following results in Acocella et al (2013), who extend the theory of economic policy to a world with rational expectations, we show that forward guidance provides enhanced controllability and stabilizability – especially where such properties have not been available before. As a by-product we find that forward guidance severely limits the scope and incentives for time inconsistent behaviour in an economy whose policy goals are ultimately reachable. It can therefore add to the credibility of a set of policies.



Testo completo: http://www.memotef.uniroma1.it/sites/dipartimento/files/wpapers/documenti/FullTextWP132.pdf

Esportazione dati in Refworks (solo per utenti abilitati)