The Limits of Counter-Cyclical Monetary Policy: an Analysis Based on Optimal Control Theory and Vector Autoregressions

Robert Litterman

Annals of Economics and Statistics, 1987, issue 6-7, 125-160

Abstract: Optimal control theory can be combined with the probability structure of a vector autoregression to investigate the tradeoffs available to policy-makers. Such an approach obtains results based on a minimal set of assumptions about the economy and the structure of policy actions. This paper takes this approach to analyze the potential effectiveness of countercyclical monetary policy.

Date: 1987
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Working Paper: The limits of counter-cyclical monetary policy: an analysis based on optimal control theory and vector autoregressions (1986)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:1987:i:6-7:p:125-160

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