search query: @indexterm Monetary Policy / total: 1108
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| Author: | Söderström, U. |
| Title: | Monetary policy with uncertain parameters |
| Journal: | Scandinavian Journal of Economics
2002 : MAR, VOL. 104:1, p. 125-145 |
| Index terms: | Monetary policy Interest rates Uncertainty |
| Language: | eng |
| Abstract: | The paper shows that uncertainty about the parameters in a dynamic macroeconoic model may lead to more aggressive monetary policy. In particular, when there is uncertainty about the persistence of inflation, it may be optimal for the central bank to respond to shocks more aggressively in order to reduce uncertainty about the future development of inflation. Uncertainty about other parameters, on the other hand, dampens the policy response. |
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