This paper provides a simple and elegance approach for an empirical investigation of a model with Epstein-Zin (1989) preferences. The perturbation method implemented in Dynare is readily applicable for computation of equilibrium and welfare. A stylized new Keynesian economy with sticky prices is analyzed and optimal simple rules are accessed across various types of monetary policy rules.
Recursive preference, perturbation method, Dynare, Ramsey steady state, optimal simple rule.
Economic Policy | Finance
Optimal Monetary Policy in a Model with Recursive Preferences. (2010). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1259
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