Hello everyone,
After I get all the optimal policy coefficients and say I find the monetary policy regime associated with the highest welfare, and assume that the welfare loss function = 200. How do I present the result in my paper? I noticed that most paper use the welfare as percentage to steady state consumption. I dont understand how to present my results in a similar manner. Can anyone please explain the way most papers follow? Thanks!
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Conditional welfare and steady state consumption
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Conditional welfare and steady state consumption
by dynare2014 » Tue Feb 24, 2015 11:31 pm
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Re: Conditional welfare and steady state consumption
by jpfeifer » Wed Feb 25, 2015 10:07 am
Please take a look at Section "3.2 Measuring Welfare Costs" of Schmitt-Grohe/Uribe (2006): "Optimal simple and implementable monetary and fiscal rules: expanded version" at http://www.nber.org/papers/w12402
Essentially, you compute the fraction of consumption that you need to take away in steady state to yield the same utility.
Essentially, you compute the fraction of consumption that you need to take away in steady state to yield the same utility.
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