A Note on Simple MSV Solution Methods for Rational Expectations Models of Monetary Policy

Oct 2003 | 173

Authors: Richard Mash

We analyse the derivation of optimal monetary policy under discretion and commitment when lagged expectations appear in the Phillips curve, making use of the comparatively simple MSV approach which does not require transformation of the model into state-space form.

JEL Codes: C61, E52, E58.

Keywords: Monetary Policy, Rational Expectations, Solution Methods, Minimal State Variable, Undetermined Coefficients.

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