Article ID Journal Published Year Pages File Type
11023400 Economics Letters 2018 6 Pages PDF
Abstract
This paper studies how asset price model misspecification affects the conduct of monetary policy under commitment in a New Keynesian model using robust control techniques. We find that monetary policy reacts aggressively to both asset price and inflation shocks to guard herself against worst-case outcome.
Keywords
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Preview
Financial stability under model uncertainty
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