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Policymakers' Uncertainty
Cieślak, Anna; Hansen, Stephen; McMahon, Michael; … - National Bureau of Economic Research - 2023
Uncertainty is a ubiquitous concern emphasized by policymakers. We study how uncertainty affects decision-making by the Federal Open Market Committee (FOMC). We distinguish between the notion of Fed-managed uncertainty vis-a-vis uncertainty that emanates from within the economy and which the Fed...
Persistent link: https://www.econbiz.de/10014436980
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Monetary Policy in an Uncertain Environment
Feldstein, Martin - 2003
This paper discusses the nature of the uncertainty faced by central banks and considers three approaches to dealing with uncertainty(1) formal optimization models and robust rules based on such models; (2) informal rules like the Taylor rule and inflation targeting; and (3) a case by case...
Persistent link: https://www.econbiz.de/10012468728
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Robust Optimal Policy in a Forward-Looking Model with Parameter and Shock Uncertainty
Giannoni, Marc - 2006
This paper characterizes a robust optimal policy rule in a simple forward-looking model, when the policymaker faces uncertainty about model parameters and shock processes. We show that the robust optimal policy rule is likely to involve a stronger response of the interest rate to fluctuations in...
Persistent link: https://www.econbiz.de/10012466729
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A Synthesis of Keynesian, Monetary, and Portfolio Approaches to FlexibleExchange Rates
Gylfason, Thorvaldur - 1982
This paper presents a simple synthesis of Keynesian, monetary, and portfolio approaches to macroeconomic theory under …
Persistent link: https://www.econbiz.de/10012478158
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Portfolio Choice in a Monetary Open-Economy DSGE Model
Engel, Charles - 2006
this risk is hedged through nominal assets rather than through equities …
Persistent link: https://www.econbiz.de/10012466454
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Monetary Policy and the Currency Denomination of Debt : A Tale of Two Equilibria
Velasco, Andres - 2004
Exchange rate policies depend on portfolio choices, and portfolio choices depend on anticipated exchange rate policies. This opens the door to multiple equilibria in policy regimes. We construct a model in which agents optimally choose to denominate their assets and liabilities either in...
Persistent link: https://www.econbiz.de/10012467862
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Sovereign Debt Portfolios, Bond Risks, and the Credibility of Monetary Policy
Du, Wenxin - 2016
and nominal bond risks in the presence of risk-averse investors. In our model, low credibility governments inflate during … inflation, investors require risk premia on nominal debt, making nominal debt issuance costly for low credibility governments … significantly larger nominal bond risk premia and borrow less in local currency …
Persistent link: https://www.econbiz.de/10012456087
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Rethinking the Role of NAIRU in Monetary Policy : Implications of Model Formulation and Uncertainty
Estrella, Arturo - 2000
In this paper we rethink the NAIRU concept and examine whether it might have a useful role in monetary policy. We argue that it can, but success depends critically on defining NAIRU as a short-run concept and distinguishing it from a long-run concept like the natural rate of unemployment. We...
Persistent link: https://www.econbiz.de/10012470871
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Robust Monetary Policy Under Model Uncertainty in a Small Model of the U.S. Economy
Onatski, Alexei - 2000
This paper examines monetary policy in Rudebusch and Svensson's (1999) two equation macroeconomic model when the policymaker recognizes that the model is an approximation and is uncertain about the quality of that approximation. It is argued that the minimax approach of robust control provides a...
Persistent link: https://www.econbiz.de/10012471286
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Robustness of Simple Monetary Policy Rules under Model Uncertainty
Levin, Andrew - 1998
In this paper, we investigate the properties of alternative monetary policy rules using four structural macroeconometric models: the Fuhrer-Moore model, Taylor's Multi-Country Model, the MSR model of Orphanides and Wieland, and the FRB staff model. All four models incorporate the assumptions of...
Persistent link: https://www.econbiz.de/10012472239