Time-Consistent Policies
28 Pages Posted: 6 Feb 2001
Date Written: December 6, 2000
Abstract
In many cases the optimal open-loop policy to influence agents who solve dynamic problems is time-inconsistent. We show how to construct a time-consistent open-loop policy rule. We also consider an additional restriction under which the time-consistent open-loop policy is stationary. We use examples to illustrate the properties of these tax rules.
Keywords: Time inconsistency, open-loop policies, stationarity
JEL Classification: C72, D83
Suggested Citation: Suggested Citation
Karp, Larry S. and Lee, In Ho, Time-Consistent Policies (December 6, 2000). Available at SSRN: https://ssrn.com/abstract=258981 or http://dx.doi.org/10.2139/ssrn.258981
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