Federal Reserve Bank of San Francisco
Working Paper Series
Solving for optimal simple rules in rational expectations models
This paper presents techniques to solve for optimal simple monetary policy rules in rational expectations models, assuming discretion. The techniques described are notable for the flexibility they provide over the structure of the policy rule being solved for. Specifically, not all state variables need enter the policy rule allowing rules optimal conditional on a given information set to be easily constructed. The algorithms described are compared to related solution methods, and applied to the model in Clarida, Gali, and Gertler (1999).
Cite this item
Richard Dennis, Solving for optimal simple rules in rational expectations models, Federal Reserve Bank of San Francisco, Working Paper Series 2000-14, 2000.
Keywords: Econometric models ; Rational expectations (Economic theory)
This item with handle RePEc:fip:fedfwp:2000-14
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