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Asymmetric forecasting and commitment policy in a robust control problem

Author

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  • Taro Ikeda

    (Kurume University, Faculty of Economics)

Abstract

This paper provides a piece of results regarding asymmetric forecasting and commitment monetary policy with a robust control algorithm. Previous studies provide no clarification of the connection between asymmetric preference and robust commitment policy. Three results emerge from general equilibrium modeling with asymmetric preference: (i) the condition for system stability implies an average inflation bias with respect to asymmetry (ii) the effect of asymmetry can be mitigated if policy makers relinquish a concern for robustness, and (iii) commitment policy may be superior to discretionary policy under widely used calibration sets, regardless of asymmetry.

Suggested Citation

  • Taro Ikeda, 2013. "Asymmetric forecasting and commitment policy in a robust control problem," Discussion Papers 1306, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1306
    as

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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2013/1306.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    asymmetric forecasting; commitment monetary policy; robust control;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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