Comment on Iovino, La'O and Mascarenhas, 'Optimal Monetary Policy with an Informationally-Constrained Central Banker'
We explain the logic behind Iovino, La’O and Mascarenhas' irrelevance result and show that if restrictions are imposed on equilibria, then monetary policy should in general depend on the central banks information. We also offer some speculative answers to their questions and discuss the sense in which policy is converging towards theory.
Jan 1, 2022