Publication
Apr 2009
This paper shows how to solve linear dynamic rational expectations models with anticipated shocks by using the generalized Schur decomposition method. Furthermore, the authors determine the optimal unrestricted and restricted policy responses to anticipated shocks. They demonstrate their solution method by means of a micro-founded hybrid New Keynesian model and show that anticipated cost-push shocks entail higher welfare losses than unanticipated shocks of equal size.
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English (PDF, 29 pages, 427 KB) |
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Author | Hans-Werner Wohltmann, Roland Winkler |
Series | Kiel Institute Working Papers |
Issue | 1507 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2009 Kiel Institute for the World Economy |