Monetary policy with unknown natural rates

The "unemployment gap" is an important factor in monetary policy decisions. But the size of the gap depends on the level of natural rate of unemployment, which is inherently unobservable. The uncertainty surrounding estimates of the natural rate, and the costs of mismeasuring it, may recommend a policy rule that responds to the rate of change in the actual unemployment rate rather than to the implied unemployment gap.

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Year of publication:	2011
Authors:	Lubik, Thomas A. ; Romero, Jessie
Published in:	Richmond Fed Economic Brief. - Federal Reserve Bank of Richmond. - 2011, Jul, 11-7
Publisher:	Federal Reserve Bank of Richmond
Subject:	Inflation (Finance) \| Monetary policy \| Unemployment

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

Persistent link: https://www.econbiz.de/10009321119