Optimal policy design in nonlinear DSGE models: An n-order accurate approximation

2021 ◽  
Vol 140 ◽  
pp. 103918
Author(s):  
Isaac Gross ◽  
James Hansen
Keyword(s):  
Optimal Policy ◽  
Policy Design ◽  
Dsge Models ◽  
Accurate Approximation

scholarly journals The Effectiveness of Employment Vouchers: A Simple Approach

2000 ◽  
Vol 1 (4) ◽  
pp. 385-419 ◽  
Author(s):  
J. Michael Orszag ◽  
Dennis J. Snower
Keyword(s):  
Optimal Policy ◽  
Policy Design ◽  
Unemployment Benefits ◽  
Government Budget ◽  
Long Term Effects ◽  
Short Term ◽  
Wide Range ◽  
The Government ◽  
Hiring And Firing

Abstract This paper explores the optimal design of subsidies for hiring unemployed workers (`employment vouchers' for short) in the context of a simple dynamic model of the labour market. Focusing on the short-term and long-term effects of the vouchers on employment and unemployment, the analysis shows how the optimal policy depends on the rates of hiring and firing, and on the problems of displacement and deadweight. It also examines the roles of the government budget constraint and of the level of unemployment benefits in optimal policy design. We calibrate the model and evaluate the effectiveness of employment vouchers in reducing unemployment for a wide range of feasible parameters.

Testing monetary policy optimality using volatility outcomes: a novel approach

2016 ◽  
Vol 16 (2) ◽  
Author(s):  
Federico Ravenna
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Optimal Policy ◽  
The United States ◽  
New Keynesian ◽  
Model Parameters ◽  
Dsge Models ◽  
Optimal Monetary Policy ◽  
Novel Approach ◽  
Interest Rate Volatility

AbstractWe propose a method to assess the efficiency of macroeconomic outcomes using the restrictions implied by optimal policy DSGE models for the volatility of observable variables. The method exploits the variation in the model parameters, rather than random deviations from the optimal policy. In the new Keynesian business cycle model this approach shows that optimal monetary policy imposes tighter restrictions on the behavior of the economy than is readily apparent. The method suggests that for the historical output, inflation and interest rate volatility in the United States over the 1984–2005 period to be generated by any optimal monetary policy with a high probability, the observed interest rate time series should have a 25% larger variance than in the data.

Optimal Policy Design: A CGE Approach

2017 ◽  
Author(s):  
Martin Cicowiez ◽  
Bernard Decaluwe ◽  
Mustapha K. Nabli
Keyword(s):  
Optimal Policy ◽  
Policy Design

scholarly journals Technical Change, Wage Inequality, and Taxes

2015 ◽  
Vol 105 (10) ◽  
pp. 3061-3101 ◽  
Author(s):  
Laurence Ales ◽  
Musab Kurnaz ◽  
Christopher Sleet
Keyword(s):  
Labor Market ◽  
Income Distribution ◽  
Wage Inequality ◽  
Technical Change ◽  
Optimal Policy ◽  
Policy Design ◽  
Income Taxes ◽  
Policy Response ◽  
Assignment Model ◽  
Optimal Tax

This paper considers the normative implications of technical change for tax policy design. A task-to-talent assignment model of the labor market is embedded into an optimal tax problem. Technical change modifies equilibrium wage growth across talents and the substitutability of talents across tasks. The overall optimal policy response is to reduce marginal income taxes on low to middle incomes, while raising those on middle to high incomes. The reform favors those in the middle of the income distribution, reducing their average taxes while lowering transfers to those at the bottom. (JEL D31, H21, H23, H24, J31, O33)

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