The Macroeconomic Loss Function: A Critical Note

The standard loss function gives the same weight to positive and negative deviations from the output and inflation targets. This short note criticizes this symmetry assumption. If the period covered is long enough output growth in excess of the target, and often also inflation rates that are below target, should be counted as gains instead of losses.

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Year of publication:	2002
Authors:	Mayer, Thomas
Publisher:	Davis, CA : University of California, Department of Economics
Subject:	Volkswirtschaftlicher Schaden \| Bewertung \| Gesamtwirtschaftliche Produktion \| Inflation \| Theorie \| Loss functions \| macro policy evaluation

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Series:	Working Paper ; 02-2
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	349906718 [GVK] hdl:10419/79417 [Handle] RePEc:cda:wpaper:02-2 [RePEc]
Classification:	E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General ; E37 - Forecasting and Simulation
Source:	EconStor

Persistent link: https://www.econbiz.de/10010318590