Asymmetric forecasting and commitment policy in a robust control problem

Taro Ikeda
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Taro Ikeda: Kurume University, Faculty of Economics

No 1306, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: This paper provides a piece of results regarding asymmetric forecasting and commitment monetary policy with a robust control algorithm. Previous studies provide no clarification of the connection between asymmetric preference and robust commitment policy. Three results emerge from general equilibrium modeling with asymmetric preference: (i) the condition for system stability implies an average inflation bias with respect to asymmetry (ii) the effect of asymmetry can be mitigated if policy makers relinquish a concern for robustness, and (iii) commitment policy may be superior to discretionary policy under widely used calibration sets, regardless of asymmetry.

Keywords: asymmetric forecasting; commitment monetary policy; robust control (search for similar items in EconPapers)
JEL-codes: E50 E52 E58 (search for similar items in EconPapers)
Pages: 15pages
Date: 2013-04
New Economics Papers: this item is included in nep-cba, nep-for and nep-mac
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