Uncovering Policy Makers' Loss Function

Paolo Surico

Macroeconomics from University Library of Munich, Germany

Abstract: The quadratic form of policy makers' loss function has gained a wide consensus in monetary policy analysis mainly because of its analytical tractability. A number of researchers, however, have recently proposed alternative functional forms which have also proved to yield tractable solutions of the central bank optimization problem. Using a nonparametric specification of the output gap argument into the loss function, this paper attempts to discriminate among three classes of proposals through the evidence drawn upon the form of the US efficient policy frontier.

Keywords: nonquadratic loss function; efficient policy frontier; kernel regression (search for similar items in EconPapers)
JEL-codes: C52 E52 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2002-10-16
New Economics Papers: this item is included in nep-mon and nep-pol
Note: Type of Document - tex; prepared on pc; to print on hp; pages: 9; figures: included
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0210003

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