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Monetary Policy with Uncertain Parameters Author info | Abstract | Publisher info | Download info | Related research | Statistics Soderstrom, Ulf
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This paper shows that--in contrast to the received wisdom--uncertainty about the parameters in a dynamic macroeconomic model may lead to more aggressive monetary policy. In particular, when there is uncertainty about the persistence of inflation, it may be optimal for the central bank to respond to shocks more aggressively in order to reduce uncertainty about the future development of inflation. Uncertainty about other parameters, on the other hand, dampens the policy response. Copyright 2002 by The editors of the Scandinavian Journal of Economics.
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Article provided by Blackwell Publishing in its journal Scandinavian Journal of Economics .
Volume (Year): 104 (2002)
Issue (Month): 1 ()
Pages: 125-45
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Handle: RePEc:bla:scandj:v:104:y:2002:i:1:p:125-45Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0347-0520
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Keywords: Other versions of this item:
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