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principle works well in determining whether to regulate, but gives modest guidance about the level of regulation. One … emissions trajectories that minimize the risk of catastrophic outcomes, and then (2) backing out the social cost of carbon based …
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This paper studies the design of optimal time-consistent monetary policy in an economy where the planner trusts its own model, while a representative household uses a set of alternative probability distributions governing the evolution of the exogenous state of the economy. In such environments,...
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probabilistic description of uncertainty is present, we observe analogue quantitative and qualitative properties. The type of … utility under a nonlinear expectation, and show monotonicity and continuity of utility. Risk aversion is characterized, and …
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dynamical estimate of the market price of risk and updates her stochastic utility in accordance with the so-perceived elapsed …
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Model uncertainty has the potential to change importantly how monetary policy should be conducted, making it an issue … form expectations using the misspecified model. Next, I exploit the connection between robust control and uncertainty …
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