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Abstract This paper presents a toolkit for generating optimal policy projections. It makes five contributions. First, the toolkit requires a minimal set of inputs: only a baseline projection for target and instrument variables and impulse responses of those variables to policy shocks. Second, it solves optimal policy projections under commitment, limited-time commitment, and discretion. Third, it handles multiple policy instruments. Fourth, it handles multiple constraints on policy instruments such as a lower bound on the policy rate and an upper bound on asset purchases. Fifth, it allows alternative approaches to address the forward guidance puzzle. The toolkit that accompanies this paper is Dynare compatible, which facilitates its use. Examples replicate existing results in the optimal monetary policy literature and illustrate the usefulness of the toolkit for highlighting policy trade-offs. We use the toolkit to analyse US monetary policy at the height of the Great Financial Cris

City ofUnited kingdomHumboldt university berlinEuropean central bankCollaborative research centerMonetary policy strategy divisionPrinceton university bendheim centerStudent research collaboratorInstitute for economic theoryMonetary policyGerman research foundationInvestment banking divisionBarclays investment bankTransaction servicesPolicy strategy divisionDirectorate general monetary policy