Optimal policy and taylor rule cross-checking under parameter uncertainty
Dirk Bursian and
Markus Roth ()
No 30, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE
We examine whether the robustifying nature of Taylor rule cross-checking under model uncertainty carries over to the case of parameter uncertainty. Adjusting monetary policy based on this kind of cross-checking can improve the outcome for the monetary authority. This, however, crucially depends on the relative welfare weight that is attached to the output gap and also the degree of monetary policy commitment. We find that Taylor rule cross-checking is on average able to improve losses when the monetary authority only moderately cares about output stabilization and when policy is set in a discretionary way.
Keywords: Optimal monetary policy; parameter uncertainty; Taylor rule (search for similar items in EconPapers)
JEL-codes: E47 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Journal Article: Optimal policy and Taylor rule cross-checking under parameter uncertainty (2014)
Working Paper: Taylor rule cross-checking and selective monetary policy adjustment (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:30
Access Statistics for this paper
More papers in SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().