Robust Versus Optimal Rules in Monetary Policy: A Note

International Monetary Fund

No 2004/096, IMF Working Papers from International Monetary Fund

Abstract: We provide a framework for analyzing the choice between optimal and robust monetary policy rules in the presence of paradigm uncertainty. We first discuss the conditions on uncertainty that render a robust rule preferable to an optimal rule. Second, we show how the degree of risk aversion of the policymaker increases the region in which the robust rule is preferred.

Keywords: WP; central bank (search for similar items in EconPapers)
Pages: 10
Date: 2004-06-01
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Citations: View citations in EconPapers (1)

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