Robust Control and Monetary Policy Delegation

Moïse Sidiropoulos and Giuseppe Diana ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper adapts in a simple static context the Rogoff's (1985) analysis of monetary policy delegation to a conservative central banker to the robust control framework. In this framework, uncertainty means that policymakers are unsure about their model, in the sense that there is a group of approximate models that they also consider as possibly true, and their objective is to choose a rule that will work under a range of di¤erent model specifications. We find that robustness reveals the emergence of a precautionary behaviour in the case of unstructured model uncertainty, reducing thus government's willingness to delegate monetary policy to a conservative central banker.

Keywords: Robust control; Monetary policy delegation; Central bank conservativeness. (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2006-07-21
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Citations: View citations in EconPapers (6)

Published in Massimo Salzano and David Colander (ed.): “Complexity Hints for Economic Policy”, Springer-Verlag Publisher, 2007 (2007): pp. 303-310

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Related works:
Working Paper: Robust Control and Monetary Policy Delegation (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23715

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