Uncovering Policy Makers' Loss Function

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Uncovering Policy Makers' Loss Function

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Paolo Surico (Bocconi University)

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Paolo Surico

Abstract

The quadratic form of policy makers' loss function has gained a wide consensus in monetary policy analysis mainly because of its analytical tractability. A number of researchers, however, have recently proposed alternative functional forms which have also proved to yield tractable solutions of the central bank optimization problem. Using a nonparametric specification of the output gap argument into the loss function, this paper attempts to discriminate among three classes of proposals through the evidence drawn upon the form of the US efficient policy frontier.

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Paper provided by EconWPA in its series Macroeconomics with number 0210003.

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Length: 9 pages
Date of creation: 16 Oct 2002
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Handle: RePEc:wpa:wuwpma:0210003

Note: Type of Document - tex; prepared on pc; to print on hp; pages: 9; figures: included
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Find related papers by JEL classification:
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2002-10-23 (All new papers)
NEP-MON-2002-10-23 (Monetary Economics)
NEP-POL-2002-10-23 (Positive Political Economics)

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Other versions:
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Other versions:
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