Advanced Search
MyIDEAS: Login

Simple rules versus optimal policy: what fits?

Contents:

Author Info

  • Ida Wolden Bache

    (Norges Bank (Central Bank of Norway))

  • Leif Brubakk

    ()
    (Norges Bank (Central Bank of Norway))

  • Junior Maih

    ()
    (Norges Bank (Central Bank of Norway))

Registered author(s):

    Abstract

    We estimate a small open-economy DSGE model for Norway with two specifications of monetary policy: a simple instrument rule and optimal policy based on an intertemporal loss function. The empirical fit of the model with optimal policy is as good as the model with a simple rule. This result is robust to allowing for misspecification following the DSGE-VAR approach proposed by Del Negro and Schorfheide (2004). The interest rate forecasts from the DSGE-VARs are close to Norges Bank's official forecasts since 2005. One interpretation is that the DSGE-VAR approximates the judgment imposed by the policymakers in the forecasting process.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.norges-bank.no/en/Published/Papers/Working-Papers/2010/WP-201003/
    Download Restriction: no

    Bibliographic Info

    Paper provided by Norges Bank in its series Working Paper with number 2010/03.

    as in new window
    Length: 31 pages
    Date of creation: 07 Apr 2010
    Date of revision:
    Handle: RePEc:bno:worpap:2010_03

    Note: First version:
    Contact details of provider:
    Postal: Postboks 1179 Sentrum, 0107 Oslo
    Phone: +47 22 31 60 00
    Fax: +47 22 41 31 05
    Email:
    Web page: http://www.norges-bank.no/
    More information through EDIRC

    Related research

    Keywords: DSGE models; forecasting; optimal monetary policy;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Wolden Bache, Ida & Sofie Jore, Anne & Mitchell, James & Vahey, Shaun P., 2011. "Combining VAR and DSGE forecast densities," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1659-1670, October.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:bno:worpap:2010_03. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.