@techreport{NBERw7953,
 title = "Indicator Variables for Optimal Policy",
 author = "Lars E.O. Svensson and Michael Woodford",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "7953",
 year = "2000",
 month = "October",
 URL = "http://www.nber.org/papers/w7953",
 abstract = {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.},
}