کد مقاله کد نشریه سال انتشار مقاله انگلیسی نسخه تمام متن
5100021 1377076 2006 19 صفحه PDF دانلود رایگان
عنوان انگلیسی مقاله ISI
Optimal nonlinear policy: signal extraction with a non-normal prior
موضوعات مرتبط
مهندسی و علوم پایه ریاضیات کنترل و بهینه سازی
پیش نمایش صفحه اول مقاله
Optimal nonlinear policy: signal extraction with a non-normal prior
چکیده انگلیسی
The literature on optimal monetary policy typically makes three major assumptions: (1) policymakers' preferences are quadratic, (2) the economy is linear, and (3) stochastic shocks and policymakers' prior beliefs about unobserved variables are normally distributed. This paper relaxes the third assumption and explores its implications for optimal policy. The separation principle continues to hold in this framework, allowing for tractability and application to forward-looking models, but policymakers' beliefs are no longer updated in a linear fashion, allowing for plausible nonlinearities in optimal policy. We consider in particular a class of models in which policymakers' priors about the natural rate of unemployment are diffuse in a region around the mean. When this is the case, optimal policy responds cautiously to small surprises in the observed unemployment rate, but becomes increasingly aggressive at the margin. These features match statements by Federal Reserve officials and the behavior of the Fed in the 1990s.
ناشر
Database: Elsevier - ScienceDirect (ساینس دایرکت)
Journal: Journal of Economic Dynamics and Control - Volume 30, Issue 2, February 2006, Pages 185-203
نویسندگان
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