NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Indicator Variables for Optimal Policy

Lars E.O. Svensson, Michael Woodford

NBER Working Paper No. 7953
Issued in October 2000
NBER Program(s):   EFG   ME

The optimal weights on indicators in models with partial information about the state of the economy and forward-looking variables are derived and interpreted, both for equilibria under discretion and under commitment. An example of optimal monetary policy with a partially observable potential output and a forward-looking indicator is examined. The optimal response to the optimal estimate of potential output displays certainty-equivalence, whereas the optimal response to the imperfect observation of output depends on the noise in this observation.

download in pdf format
   (364 K)

email paper

This paper is available as PDF (364 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7953

Published:

Users who downloaded this paper also downloaded these:
Svensson and Woodford w8255 Indicator Variables for Optimal Policy under Asymmetric Information
Svensson and Woodford w9747 Implementing Optimal Policy through Inflation-Forecast Targeting
Svensson w4871 Estimating and Interpreting Forward Interest Rates: Sweden 1992 - 1994
Clarida, Gali, and Gertler w7147 The Science of Monetary Policy: A New Keynesian Perspective
Gerlach and Svensson w8025 Money and Inflation in the Euro Area: A Case for Monetary Indicators?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us