Solution of RE Models with Anticipated Shocks and Optimal Policy

Hans-Werner Wohltmann and Roland Winkler ()

No 2007-32, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: The purpose of this paper is to solve linear dynamic rational expectations models with anticipated shocks by using the generalized Schur decomposition method. We also determine the optimal unrestricted and restricted policy responses to temporary as well as permanent shocks which both are anticipated by the public. In particular, our method is useful for the analysis of optimal monetary policy in New Keynesian dynamic general equilibrium models.

Keywords: Anticipated Shocks; Optimal Monetary Policy; Rational Expectations; Generalized Schur Decomposition (search for similar items in EconPapers)
JEL-codes: C32 C61 E52 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:6877

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