Show simple item record

dc.contributor.author Brendon, Charles
dc.contributor.author Ellison, Martin
dc.date.accessioned 2018-04-25T09:03:36Z
dc.date.available 2018-04-25T09:03:36Z
dc.date.issued 2018-01
dc.identifier.uri http://hdl.handle.net/10230/34453
dc.description.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.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;82
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights.uri https://creativecommons.org/licenses/by/4.0/
dc.title Time-consistently undominated policies
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Time consistency
dc.subject.keyword Undominated policy
dc.subject.keyword Ramsey policy
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess

Thumbnail

This item appears in the following Collection(s)

Show simple item record

Search DSpace


Advanced Search

Browse

My Account

Statistics

Compliant to Partaking