Robust versus Optimal Rules in Monetary Policy: A Note

We provide a framework for analysing the choice between optimal and robust rules in the presence of paradigm uncertainty in monetary policy. We thus provide two issues: first, we discuss the conditions of uncertainty that render a robust rule a preferable substitute to optimal rules and second, we show how the degree of risk aversion increases the desirability of robust rules.

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Year of publication:	2002
Authors:	Demertzis, M. ; Tieman, A.F.
Institutions:	de Nederlandsche Bank
Subject:	Model Uncertainty \| Monetaru Policy \| Optimal Policy Rules

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Extent:	application/pdf
Series:	WO Research Memoranda (discontinued).
Type of publication:	Book / Working Paper
Classification:	E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies ; C70 - Game Theory and Bargaining Theory. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005106692