Are Model-Based Inflation Forecasts Used in Monetary Policymaking? A Case StudyStefano Siviero (), Daniele Terlizzese () and . Visco Working Papers from Banca Italia - Servizio di Studi Abstract: The process through which economic policy is conceived and decided cannot be simply described as the optimisation of a well-defined loss function s ubject to the constraints provided by a model of the economy. Even egnoring the forbidding difficulties of eliciting a stable and explicit loss function from real-life policymakers, the availability of a model reliably describing all the responses of a complex economy to policy interventions is hardly to be expected. Policy will therefore be made against the background of an incomplete model, lacking some policy transmission channels, subject to data revision and possibly to instability in the estimates equations, Requiring continuous reassessment in the light of the available data. Drawing on the experience gained with a macroeconometric model at the Bank of Italy, in this paper we describe the uses to which such a model can be put in the policymaking process. Keywords: ECONOMIC POLICY; ECONOMIC MODELS (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Access Statistics for this paper More papers in Working Papers from Banca Italia - Servizio di Studi |
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