Optimal Monetary Policy Rules from a Timeless Perspective

Abstract

The timelessly optimal monetary policy proposed by Woodford (2003) may be dominated by alternative timeless policies. We provide a formal justification for these alternative policies. We demonstrate why discount rates do not matter and establish that optimizing over the unconditional expectation of the policy criterion function recovers these alternative strategies.Time consistency, unconditional expectation, timeless perspective, optimal monetary policy.