S-WoPEc
 
Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 309:
Should central banks be more aggressive?

Ulf Söderström ()

Abstract: Simple models of monetary policy often imply optimal policy behavior that is considerably more aggressive than what is commonly observed. This paper argues that such counterfactual implications are due to model restrictions and a failure to account for multiplicative parameter uncertainty, rather than to policymakers being too cautious in their implementation of policy. Comparing a restricted and an unrestricted version of the same empirical model, the unrestricted version leads to less volatility in optimal policy, and, taking parameter uncertainty into account, to policy paths very close to actual Federal Reserve policy.

Keywords: Optimal monetary policy; parameter uncertainty; interest rate smoothing.; (follow links to similar papers)

JEL-Codes: E52; E58; (follow links to similar papers)

31 pages, March 8, 1999

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

hastef0309.pdf.zip    PDF-file (zipped) (585kB) 
hastef0309.pdf    PDF-file (829kB) 
hastef0309.ps.zip    PKZipped PostScript (562kB) 
hastef0309.ps    PostScript file (2.37MB) 
Download Statistics

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:hastef:0309 This page was generated on 2014-12-14 19:22:57