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  • Hyosung Kwon (a1) and Jianjun Miao (a2) (a3) (a4)


This paper extends Woodford's approach to the robustly optimal monetary policy to a general linear quadratic framework. We provide algorithms to solve for a time-invariant linear robustly optimal policy in a timeless perspective and for a time-invariant linear Markov perfect equilibrium under discretion. We apply our methods to a New Keynesian model of monetary policy with persistent cost-push shocks and inflation persistence. We find that the robustly optimal commitment inflation is less responsive to a cost-push shock when the shock is more persistent and that the robustly optimal discretionary policy is more responsive to lagged inflation when inflation is more persistent.


Corresponding author

Address correspondence to: Jianjun Miao, Department of Economics, Boston University, 270 Bay State Road, Boston, MA 02215, USA; e-mail:


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We would like to thank Mike Woodford and Simon Gilchrist for helpful comments. We have benefitted from comments by the seminar participants at Boston University. First version: February 2012.



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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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