Avouyi-Dovi, Sanvi; Sahuc, Jean-Guillaume - In: Journal of Macroeconomics 33 (2011) 2, pp. 151-161
This paper quantifies the effects on welfare of misspecified monetary policy objectives in a stylized DSGE model. We show that using inappropriate objectives generates relatively large welfare costs. When expressed in terms of 'consumption equivalent' units, these costs correspond to permanent...