First draft : March 2000 This draft : April 2002 Optimal Commitment Policy under Noisy Information ∗

@inproceedings{Aoki2002FirstD,
  title={First draft : March 2000 This draft : April 2002 Optimal Commitment Policy under Noisy Information ∗},
  author={Kosuke Aoki},
  year={2002}
}
This paper studies an advantage of commitment over discretion when a central bank observes only noisy measures of current inflation and output, in the context of an optimizing model with nominal-price stickiness. Under a commitment regime, if current policy turns out to be too expansionary (contractionary) because of the bank’s information problem… CONTINUE READING