Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098337 | Journal of Economic Dynamics and Control | 2015 | 19 Pages |
Abstract
Accounting for the uncertainty in real-time perceptions of the state of the economy is believed to be critical for monetary policy analysis. We investigate this claim through the lens of a New Keynesian model with optimal discretionary policy and partial information. Structural parameters are estimated using a data set that includes real-time and ex post revised observations spanning 1965-2010. In comparison to a standard complete information model, our estimates reveal that under partial information: (i) the Federal Reserve demonstrates a significant concern for stabilizing the output gap after 1979, (ii) the model׳s fit with revised data improves, and (iii) the tension between optimal and observed policy is smaller.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Gregory E. Givens, Michael K. Salemi,