Robust monetary policy, optimal delegation and misspecified potential output

Peter Tillmann

Economics Letters, 2014, vol. 123, issue 2, 244-247

Abstract: Central banks face uncertainty about potential output. We model optimal monetary policy under discretion in a situation in which the central bank adopts a min–max approach to policy. The case for appointing a conservative central banker who puts a larger weight on inflation stabilization becomes stronger as the central bank’s concern about misspecifications increases.

Keywords: Monetary policy; Potential output; Robust control; Knightian uncertainty; Monetary delegation (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:123:y:2014:i:2:p:244-247

DOI: 10.1016/j.econlet.2014.02.021

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