Título:
|
Time-consistently undominated policies
|
Autor/a:
|
Brendon, Charles; Ellison, Martin
|
Abstract:
|
This paper proposes and characterises a new normative solution concept for Kydland and Prescott problems, allowing for a commitment device. A policy choice is dominated if either (a) an alternative exists that is superior to it in a time-consistent subdomain of the constraint set, or (b) an alternative exists that Pareto-dominates it over time. Policies may be time-consistently undominated where time-consistent optimality is not possible. We derive necessary and sufficient conditions for this to be true, and show that these are equivalent to a straightforward but significant change to the first-order conditions that apply under Ramsey policy. Time-consistently undominated policies are an order of magnitude simpler than Ramsey choice, whilst retaining normative appeal. This is illustrated across a range of examples. |
Abstract:
|
The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396. |
Materia(s):
|
-Time consistency -Undominated policy -Ramsey policy |
Derechos:
|
open access
Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.
https://creativecommons.org/licenses/by/4.0/ |
Tipo de documento:
|
Working paper |
Editor:
|
|
Compartir:
|
|
Uri:
|
https://ddd.uab.cat/record/196775
|