Creator

• Alvarez, Fernando, 1964-
• Kehoe, Patrick J.
• Neumeyer, Pablo Andrés

Series

• Working paper (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• 616

Date Created

• 2002-04

Abstract

• Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under commitment the Friedman rule of setting nominal interest rates to zero is optimal. This result is of applied interest because the Friedman rule is optimal for the standard preferences used in applied work, those consistent with the growth facts.

Keyword

• Maturity structure
• Friedman rule
• Time inconsistency
• Sustainable plans

Related information

• Published in Econometrica, (Vol. 72, Iss. 2, March 2004, pp. 541-567), https://doi.org/10.1111/j.1468-0262.2004.00500.x.

  An updated version of this Working Paper is published as Staff Report 305.

Date Modified

• 11/18/2020

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Research Paper

DOI

•  https://doi.org/10.21034/wp.616

License

• Creative Commons BY-NC Attribution-NonCommercial 4.0 International

Relationships

In Collection:

• Working Papers

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