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Monetary Policy Analysis in Backward-Looking Models

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  • Jesper Linde

    (Sveriges Riksbank)

Abstract

In this paper, I use a dynamic general equilibrium model to quantify how sensitive a typical backward-looking model used in monetary policy analysis is to the Lucas critique. The results show that the backward-looking model exhibit significant parameter instability that is economically important, but that a standard econometric test for detecting this instability fails to do so accurately in small samples. These findings suggest that the relative merits of alternative monetary policy rules should be checked in an equilibrium framework.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jesper Linde, 2000. "Monetary Policy Analysis in Backward-Looking Models," Econometric Society World Congress 2000 Contributed Papers 1028, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1028
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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