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Licensed Unlicensed Requires Authentication Published by De Gruyter Oldenbourg April 19, 2016

News Shocks and Optimal Simple Rules

  • Roland C. Winkler EMAIL logo and Hans-Werner Wohltmann
From the journal Review of Economics


This paper evaluates the performance of optimal simple policy rules in the presence of news shocks. It is shown that the inclusion of forward-looking elements enhances the performance of simple optimized interest rate rules when agents learn about future disturbances in advance. We provide a rationale for this result by demonstrating that, if shocks are news shocks, the optimal unrestricted control rule under commitment contains as a basic principle a forward-looking element.

Online erschienen: 2016-4-19
Erschienen im Druck: 2011-4-1

© 2011 by Lucius & Lucius, Stuttgart

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