How robustness can change the desirability of speed limit policy

Kohei Hasui

Scottish Journal of Political Economy, 2021, vol. 68, issue 5, 553-570

Abstract: This paper investigates a robust monetary policy under speed limit policy when a central bank fears model misspecification. We reveal several points. First, the persistence of the output gap becomes small with the robust speed limit policy. The low persistence of the output gap contributes to mitigating the variance of the output gap. Second, for a robust policy, social losses are lower under the speed limit policy than under precommitment. Our results suggest that adding the growth of the output gap to the central bank’s objectives is effective when the worst‐case scenario is realized.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/sjpe.12268

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:scotjp:v:68:y:2021:i:5:p:553-570

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0036-9292

Access Statistics for this article

Scottish Journal of Political Economy is currently edited by Tim Barmby, Andrew Hughes-Hallett and Campbell Leith

More articles in Scottish Journal of Political Economy from Scottish Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().