Survey_Woodford_2005

Abstract

I can expound the general conception of robust policy that I wish to propose using an abstract two-period policy game. A vector of endogenous variables xt is determined in two successive periods (t = 0, 1), there are many possible states of the worlds in period 1, and x1 may depend on s. The policymaker chooses a vector of controls out in each period, the value of u1 may be contingent on the state s. As a result of optimizing behavior by the private sector, in any equilibrium, the endogenous variables (x0, x1(·)) must satisfy a system of functional equations.