In this paper we compare expected loss minimization to worst-case or minimax analysis in the design of simple Taylor … rules optimized under a minimax objective in the presence of general parameter and shock uncertainty do not imply extreme … derived by expected loss minimization. Rules derived by means of minimax analysis are effective insurance policies limiting …

model range in terms of a Minimax policy comes at moderate costs in terms of lower expected performance. We extract priors … that would rationalize the Minimax policy from a Bayesian perspective. These priors indicate that full insurance is …