This paper proposes a new evaluation approach of the class of small-scale `hybrid' New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) models typically used in monetary policy and business cycle analysis. The novelty of our method is that the empirical assessment of the NK-DSGE model...

The paper investigates explanations for forecasting invariance to structural breaks. After highlighting the role of policy, we isolate possible structural invariance in a simplified dynamic macro model that nevertheless has features in common with the standard model of aggregate demand and...

Linear dynamic equilibrium correction mechanisms are shown to follow from the discretisation of continuous economic processes with steady-state solutions. In addition, the proposed procedure on the coefficients of the dynamic econometric model.

We employ a new decision-theoretic approach to dealing with Knightian uncertainty based on Simon's bounded rationality. The basic tool of this approach is a quantitative answer to the question: For a specified policy, among a set of policies, how much can our assumptions regarding e.g. model and...

We employ the robust-satisficing approach to derive robust monetary policy when parameters of a macro model are uncertain. There is a trade-off between robustness of policies and their performance. Hence, under uncertainty, the policy maker is assumed to be content with policy performance at...

We study monetary policy under uncertainty. A policy which ameliorates a worst case may differ from a policy which maximizes robustness and satisfices the performance. The former strategy is min-maxing and the latter strategy is robust-satisficing. We show an “observational equivalence”...

We investigate whether there is a case for asset prices in interest rates rules within a small econometric model of the Norwegian economy, modelling the interdependence of the real economy, credit and three classes of asset prices: housing prices, equity prices and the nominal exchange rate. We...

We investigate empirically whether a central bank can promote financial stability by stabilizing inflation and output, and whether additional stabilization of asset prices and credit growth would enhance financial stability in particular. We employ an econometric model of the Norwegian economy...

This paper develops an optimal harvesting model for the wild Atlantic salmon (Salmo salar), where various age classes of the population is included. It is shown that the marginal value-fecundity relationship of the spawning population, comprising young and old fish, is crucial for the optimal...

I attempt to find the causal effect of endogenous population size on quality of life. Quantity and quality of consumer amenities would increase with urban scale if not offset by congestion effects. To deal with endogeneity, I utilize a quasi-experimental design where I exploit the exogenous...