Implications of parameter uncertainty for monetary policy in a simple Euro area model

The 'Brainard conservatism principle' states that the optimal monetary policy rule should be less aggressive when uncertainty about parameters is taken into account. However, this principle is not fully general and may be reversed in some cases. This paper examines the implications of parameter uncertainty for monetary policy using a simple empirical model of the Euro area. The Brainard principle is found to be empirically relevant.

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Year of publication:	2002
Authors:	Bihan, Herve Le ; Sahuc, Jean-Guillaume
Published in:	Applied Economics Letters. - Taylor & Francis Journals, ISSN 1350-4851. - Vol. 9.2002, 9, p. 553-556
Publisher:	Taylor & Francis Journals

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009189212