This paper addresses the issue of how to give optimal advice about
monetary policy when it is known that the advice may not be
heeded. We examine a simple macroeconomic model in which monetary
policy has the ability to stabilize output by offsetting exogenous
shocks to aggregate demand. The optimal policy rule for such a
model is easily derived. But an advisor who knows that his advice
may not be followed should not recommend the optimal policy rule.
This is true because, in giving activist advice, such an advisor
increases uncertainty about what monetary policy will be followed.
We solve for the rule that such an advisor should use in giving
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