Optimal monetary policy and model selection in a real-time learning environment

We investigate how real-time parameter learning, optimal policies and the volatility of exogenous shocks affect the policymakers’ ability to distinguish across competing models of the economy. The detection speed of model misspecification depends only on the relative volatility of supply and demand shocks.

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Year of publication:	2012
Authors:	Ravenna, Federico
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 114.2012, 3, p. 322-325
Publisher:	Elsevier
Subject:	Learning \| Optimal monetary policy \| Model misspecification \| Business cycle

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Type of publication:	Article
Classification:	E58 - Central Banks and Their Policies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010576452