Avoiding Nash Inflation: Bayesian and Robust Response to Model Uncertainty

ISBN-13: 9781505421989 / Angielski / Miękka / 2014 / 44 str.

Federal Reserve Board

Opis

This paper considers the design of monetary policy under uncertainty. Specifically, we use a simple model to jointly consider three things: learning by the monetary authority; model misspecification; and robust policies to counter the misspecification problems. To the best of our knowledge, this is the first paper to simultaneously consider these crucial elements of real-world policy design.