On the notion of time-consistency: A comment

It is the purpose of this paper to show that the concept of time-consistency is not uniquely defined in the economics literature. In non-causal models Holly and Zarrop's (1983) time-consistency concept differs from the corresponding concept by Kydland and Prescott (1977). A policy sequence, whi...

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Veröffentlicht in:European economic review 1989-07, Vol.33 (6), p.1283-1288
Hauptverfasser: Wohltmann, Hans-Werner, Krömer, Wolfgang
Format: Artikel
Sprache:eng
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Zusammenfassung:It is the purpose of this paper to show that the concept of time-consistency is not uniquely defined in the economics literature. In non-causal models Holly and Zarrop's (1983) time-consistency concept differs from the corresponding concept by Kydland and Prescott (1977). A policy sequence, which according to Kydland and Prescott is time-consistent, is time-inconsistent in Holly and Zarrop's terms, whereas a plan, which is consistent in the sense of Holly and Zarrop, is inconsistent in the sense of Kydland and Prescott.
ISSN:0014-2921
1873-572X
DOI:10.1016/0014-2921(89)90098-6