期刊名称：Discussion Paper Series / Department of Economics, New York University
出版年度：2005
卷号：1
出版社：New York University
摘要：Erceg et al. (2000) show that when both wages and prices are sticky, max-
imization of expected utility is equivalent to minimizing a loss function with
three terms, involving measures of the variability of wage in°ation, price in°a-
tion and the output gap respectively. Here we generalize their analysis, most
importantly by not assuming the existence of output and employment subsidies
that eliminate the distortions resulting from market power in goods and labor
markets, so that the equilibrium level of output under °exible wages and prices
would not necessarily be optimal. We show that a quadratic loss function can
still be justi¯ed that involves the same three terms, albeit with di®erent rela-
tive weights and a di®erent de¯nition of the output gap. Many conclusions of
Erceg et al. are thus found to apply more generally. However, we argue that
in the presence of signi¯cant steady-state distortions, simple rules of the kind
that they examine are likely to approximate optimal policy less closely than is
suggested by their numerical results.
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