Inflation Targeting under Uncertainty
This paper studies the implications of certain kinds of uncertainty for monetary policy. It first describes the optimum policy rule in a simple model of the transmission mechanism as in Ball and Svensson. It then examines how this rule ought to be modified when there is uncertainty about the parameters, about the time lags, or about the nature of shocks. The paper also discusses the case of a small open economy such as Canada’s, with particular attention being given to uncertainty about the weights in a monetary conditions index.
|Date of creation:||1999|
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References listed on IDEAS
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- Laurence Ball, 1997.
"Efficient rules for monetary policy,"
Reserve Bank of New Zealand Discussion Paper Series
G97/3, Reserve Bank of New Zealand.
- Duguay, Pierre, 1994. "Empirical evidence on the strength of the monetary transmission mechanism in Canada: An aggregate approach," Journal of Monetary Economics, Elsevier, vol. 33(1), pages 39-61, February.
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