Can we Identify Economic Policies Stabilizing an Unstable Economy ?

Journal article: This paper shows that rules of optimal policy under commitment allow policymakers to lean against bubbles and to stabilize an unstable economy. In this framework, policymakers anchor the initial values of the expectations of the private sector. Then, this paper sets identification conditions for the parameters of optimal rules under commitment, of optimal and time consistent rules and of quasi-optimal rules. Finally, the paper concludes by presenting the pros and cons for each of these three types of policy rules for macroeconomic modelling, depending on a set of criteria.

Author(s)

Kirsten Ralf, Jean-Bernard Chatelain

Journal
  • Revue Française d’Economie
Date of publication
  • 2014
Keywords
  • Identification
  • Stabilité
  • Cohérence temporelle
  • Politique de stabilisation économique
  • Engagement crédible
Pages
  • 143-178
Version
  • 1
Volume
  • 29