Robust Monetary Policy

While there is uncertainty about the data that enter into economic models and about the parameters that govern economic models, the fact that economists often approach macroeconomic data armed with different models of the economy suggests that uncertainty, or ambiguity, about the model could also be potentially important. A policy can be made "Robust" to model uncertainty by designing it to perform well on average across all of the available fully specified models rather than to reign supreme in any particular model.

Provided by: Romanian-American University Topic: CXO Date Added: Jun 2011 Format: PDF

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