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5.2.1 Results

To analyze this modified DSGE model I again condition on the depreciation rate and the
parameters in the shock processes and evaluate loss on a grid for the other parameters. Figure
4 displays the percent of the parameter space for which discretion is superior to timeless
perspective policymaking, for given values of a, ξ, σ, ε, χ, ω, and μ.

A: Cobb-Douglas share


B: Price rigidity


C: Intertemporal elasticity


D: Substitution elasticity

E: Labor supply elasticity

F: Kimball curvature


G: Gap stabilization


Fig. 4

Qualitatively, the results in Figure 4 are in keeping with those in Figure 3. Discretion is
superior to timeless perspective policymaking for a larger share of the parameter space when
a and σ are small or when ξ, χ, and μ are large. In addition, since higher values for ω, the

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