TY  - JOUR
AU  - Svensson,Lars E. O.
AU  - Woodford,Michael
TI  - Optimal Policy with Partial Information in a Forward-Looking Model: Certainty-Equivalence Redux
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9430
PY  - 2003
Y2  - January 2003
UR  - http://www.nber.org/papers/w9430
L1  - http://www.nber.org/papers/w9430.pdf
N1  - Author contact info:
Lars E.O. Svensson
Sveriges Riksbank
SE-103 37 Stockholm
SWEDEN
Tel: +46 8 787 0107
Fax: +46 8 21 0531
E-Mail: lars.svensson@iies.su.se

Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
AB  - This paper proves a certainty equivalence result for optimal policy under commitment with symmetric partial information about the state of the economy in a model with forward-looking variables. This result is used in our previous paper,  Indicator Variables for Optimal Policy,' which synthesizes what is known about the case of symmetric partial information, and derives useful general formulas for computation of the optimal policy response coefficients and efficient estimates of the state of the economy in the context of a fairly general forward-looking rational-expectations model. In particular, our proof takes into account that, under commitment, the policymaker can affect the future evolution of the observable variables, and thereby potentially affect the future information available.
ER  -