Recommendation on optimal monetary policy evaluation

I want to make an optimal monetary policy evaluation of a non-cashless model economy, with various sources of real and nominal frictions, and even a second monetary policy instrument. I know some literature like Galí (2008-2015), Walsh (2017) books, some class notes like Sims (2017), etc. Nevertheless I don’t know if it’ll will work in a model of my own, since in those cases a PC+IS+TR+cashless (thus linearized) economy is assumed. Then, do you recommend me to review in depth works as such, or is there a more general reference that I can take to make an appropriate OMP analysis and skipping the mentioned literature?


I am not sure what the actual question is. If you want to work analytically, then using a linear model is the way to go. For more realistic settings, you should have a look at e.g. Stephanie Schmitt-Grohé and Martín Uribe (2006) Optimal Simple and Implementable Monetary and Fiscal Rules: Expanded Version


Many thanks! I think I’ll read more to have a better idea on what I actually want.