The Macroeconomic Loss Function: A Critical Note

The standard loss function gives the same weight to positive and negative deviations from the output and inflation targets. This short note criticizes this symmetry assumption. If the period covered is long enough output growth in excess of the target, and often also inflation rates that are below target, should be counted as gains instead of losses.

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Year of publication:	2003-01-16
Authors:	Mayer, Thomas
Institutions:	Economics Department, University of California-Davis
Subject:	Loss functions \| macro policy evaluation

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 22 6 pages long
Classification:	E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General ; E37 - Forecasting and Simulation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008620513