Intertemporal Distortions in the Second best
---- Acknowledgements -----
We would like to thank Fernando Alvarez, Manuel Amador, Boragan Aruoba, Marco Bassetto, Martin Bodenstein, V.V. Chari, Sanjay Chugh, Dirk Krueger, Harald Uhlig, Pierre Yared, three anonymous referees, and seminar participants at the University of Maryland, the University of Pennsylvania, Georgetown, Stanford, Chicago GSB, Duke, Cornell, UCSB, the University of Cambridge, the Federal Reserve Banks of New York, Philadelphia and San Francisco, and the NBER Summer Institute for helpful comments and suggestions. The views expressed here do not necessarily reflect the views of the Federal Reserve Bank of New York, the Federal Reserve System, or the National Bureau of Economic Research.