Super-Inertial Interest Rate Rules Are Not Solutions of Ramsey Optimal Monetary Policy
Journal article: Giannoni and Woodford (2003) found that the equilibrium determined by commitment to a super-inertial rule (where the sum of the parameters of lags of interest rate exceed ones and does not depend on the auto-correlation of shocks) corresponds to the unique bounded solution of Ramsey optimal policy for the new-Keynesian model. By contrast, this note demonstrates that commitment to an inertial rule (where the sum of the parameters of lags of interest rate is below one and only depends on the auto-correlation of shocks) corresponds to the unique bounded solution.
Author(s)
Jean-Bernard Chatelain, Kirsten Ralf
Journal
- SSRN Electronic Journal
Date of publication
- 2023
Keywords JEL
Keywords
- New-Keynesian Model
- Ramsey Optimal Policy
- Interest Rate Smoothing
- Super-Inertial Rule
- Inertial Rule
Pages
- 119-146
URL of the HAL notice
Version
- 1
Volume
- 133