Measurement errors in GDP and forward-looking monetary policy: The Swiss case

Peter Kugler, Thomas J. Jordan, Carlos Lenz and Marcel Savioz ()

No 2004,31, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: This paper analyzes forward-looking rules for Swiss monetary policy in a small structural VAR consisting of four variables. First, the paper looks at the ex ante inflation-output-growth volatility trade-off for a forward-looking policy aiming at a convex combination of a strict inflation and output growth targeting rule implied by this SVAR model. Thereby the paper introduces a new analytical method. Second, the paper considers the effect of measurement errors in GDP on this inflation-output-growth volatility trade-off. Third, the paper works at the impact of changing beliefs about the potential growth rate on the variability of output growth and inflation. Finally the effects of different targets in a forward-looking monetary policy on ex post or unconditional volatility of inflation and output growth is explored by a simulation exercise.

Keywords: Structural VAR; forward-looking monetary policy; efficiency frontier; GDP measurement errors (search for similar items in EconPapers)
JEL-codes: E52 E53 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp1:2297

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