This paper models the action of the central bank on the dynamics of the nominal interest rate with the aim of controlling inflation. The problem is set up as a two-dimensional bounded variation control problem; it is shown that its variational formulation leads to a stochastic differential game with stopping times between the conservative and the expansionist tendencies of the bank.
Optimal Control of Inflation: a Central Bank Problem
Maria B. Chiarolla;
1998-01-01
Abstract
This paper models the action of the central bank on the dynamics of the nominal interest rate with the aim of controlling inflation. The problem is set up as a two-dimensional bounded variation control problem; it is shown that its variational formulation leads to a stochastic differential game with stopping times between the conservative and the expansionist tendencies of the bank.File in questo prodotto:
Non ci sono file associati a questo prodotto.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
