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Independence and Heterogeneity in Games of Incomplete Information

Mason, Robin; Valentinyi, Akos - C.E.P.R. Discussion Papers - 2004

This Paper provides a sufficient condition for the existence and uniqueness of equilibrium in monotone pure strategies … response correspondence is a contraction mapping. This ensures equilibrium existence and uniqueness. Our approach allows us to … establish these results in a wide range of applications, including cases where there are no existing existence results. …

Persistent link: https://www.econbiz.de/10005114177

International Policy Cooperation and Model Uncertainty

Holtham, Gerald; Hughes Hallett, Andrew - C.E.P.R. Discussion Papers - 1987

The main obstacles to coordinating policies in practice are uncertainty about the correct model to use for policy design, and uncertainty about external variables. This paper examines the former problem. Numerical calculations using ten models from the recent Brookings Multicountry comparison...

Persistent link: https://www.econbiz.de/10005662409

A Scapegoat Model of Exchange Rate Fluctuations

Bacchetta, Philippe; van Wincoop, Eric - C.E.P.R. Discussion Papers - 2004

While empirical evidence finds only a weak relationship between nominal exchange rates and macroeconomic fundamentals, forex markets participants often attribute exchange rate movements to a macroeconomic variable. The variables that matter, however, appear to change over time and one variable...

Persistent link: https://www.econbiz.de/10005667035

Robust Monetary Policy in a Small Open Economy

Leitemo, Kai; Söderström, Ulf - C.E.P.R. Discussion Papers - 2005

This paper studies how a central bank’s preference for robustness against model misspecification affects the design of monetary policy in a New-Keynesian model of a small open economy. Due to the simple model structure, we are able to solve analytically for the optimal robust policy rule, and...

Persistent link: https://www.econbiz.de/10005791942

Insurance Policies for Monetary Policy in the Euro Area

Küster, Keith; Wieland, Volker - C.E.P.R. Discussion Papers - 2005

design that allow for intermediate degrees of ambiguity-aversion. These preferences allow the specification of priors but …

Persistent link: https://www.econbiz.de/10005792144

New Keynesian versus old Keynesian government spending multipliers

Cogan, John F.; Cwik, Tobias; Taylor, John B.; Wieland, … - C.E.P.R. Discussion Papers - 2009

Renewed interest in fiscal policy has increased the use of quantitative models to evaluate policy. Because of modeling uncertainty, it is essential that policy evaluations be robust to alternative assumptions. We find that models currently being used in practice to evaluate fiscal policy...

Persistent link: https://www.econbiz.de/10004961429

Screening with an Approximate Type Space

Madarász, Kristóf; Prat, Andrea - C.E.P.R. Discussion Papers - 2010

We re-visit the single-agent mechanism design problem with quasilinear preferences, but we assume that the principal knowingly operates on the basis of only an approximate type space rather than the (potentially complex) truth. We propose a two-step scheme, the profit-participation mechanism,...

Persistent link: https://www.econbiz.de/10008550321

Monetary Policy Mistakes and the Evolution of Inflation Expectations

Orphanides, Athanasios; Williams, John C - C.E.P.R. Discussion Papers - 2010

What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed...

Persistent link: https://www.econbiz.de/10008468541

The Diversity of Forecasts from Macroeconomic Models of the U.S. Economy

Wieland, Volker; Wolters, Maik H - C.E.P.R. Discussion Papers - 2010

This paper investigates the accuracy and heterogeneity of output growth and inflation forecasts during the current and the four preceding NBER-dated U.S. recessions. We generate forecasts from six different models of the U.S. economy and compare them to professional forecasts from the Federal...

Persistent link: https://www.econbiz.de/10008530347

Monetary Policy in a Small Open Economy with a Preference for Robustness

Dennis, Richard; Leitemo, Kai; Söderström, Ulf - C.E.P.R. Discussion Papers - 2007

We use robust control techniques to study the effects of model uncertainty on monetary policy in an estimated, semi-structural, small-open-economy model of the U.K. Compared to the closed economy, the presence of an exchange rate channel for monetary policy not only produces new trade-offs for...

Persistent link: https://www.econbiz.de/10005136758