Monetary Policy Analysis in Backward-Looking Models

Jesper Lindé

Annals of Economics and Statistics, 2002, issue 67-68, 155-182

Abstract: In this paper, I use a dynamic general equilibrium model to quantify how sensitive a typical backward-looking model used in monetary policy analysis is to the Lucas critique. The results show that the backward-looking model exhibit significant parameter instability that is economically important, but that a standard econometric test for detecting this instability fails to do so accurately in small samples. These findings suggest that the relative merits of alternative monetary policy rules should be checked in an equilibrium framework.

Date: 2002
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Related works:
Working Paper: Monetary Policy Analysis in Backward-Looking Models (2000)
Working Paper: Monetary Policy Analysis in Backward-Looking Models (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2002:i:67-68:p:155-182

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