Monetary policy under uncertainty and learning
Huge swings in oil, food, and other commodity prices and the global financial crisis are at the core of current monetary policy discussion. The latter events are vivid reminders of how uncertainty, imperfect knowledge, and the need to learn affect macroeconomic behavior and the conduct of monetary policy. Central bank and academic economists conducting research on the design of monetary policy have made significant advances in recent years. However, ongoing limitations of economic theory and data, structural changes in the economy, the inherent unobservability of key macro variables, and disagreements about the right model of the transmission of monetary policy imply that central bankers operate in an environment of both conventional and Knightian uncertainty. Hence economists and policymakers are engaged in continuous learning about the economy. At the same time, the public forms its expectations based on its evolving understanding of the economy and the policymakers' behavior. In this volume, leading international scholars address many of the key issues relevant to central bankers taking decisions under conditions of uncertainty and learning. The 14 essays in this volume offer both theoretical insights and international empirical results on the conduct of monetary policy under uncertainty and learning. The volume also addresses key issues on monetary policy conduct and results in Chile. Editado por Klaus Schmidt-Hebbel y Carl E. Walsh.Monetary Policy under Uncertainty and Learning: An Overview / Klaus Schmidt-Hebbel and Carl E. Walsh -- Expectations, Learning and Monetary Policy: An Overview of Recent Research / George W. Evans and Seppo Honkapohja -- Optimal Monetary Policy under Uncertainty in DSGE Models: A Markov Jump-Linear-Quadratic Approach / Lars E.O. Svensson and Noah Williams -- Imperfect Knowledge and the Pitfalls of Optimal Control Monetary Policy / Athanasios Orphanides and John C. Williams -- Robust Learning Stability with Operational Monetary Policy Rules / George W. Evans and Seppo Honkapohja -- Macroeconomic and Monetary Policies from the Eductive Viewpoint / Roger Guesnerie -- Determinacy, earnability, and Plausibility in Monetary Policy Analysis: Additional Results / Bennett T. McCallum -- A Sticky-Information General Equilibrium Model for Policy Analysis / Ricardo Reis -- Monetary Policy and Key Unobservables: Evidence from Large Industrial and Selected Inflation-Targeting Countries / Klaus Schmidt-Hebbel and Carl E. Walsh -- Inflation Target Transparency and the Macroeconomy / Martin Melecký, Diego Rodríguez Palenzuela and Ulf Söderström -- Learning, Endogenous Indexation, and Disinflation in the New-Keynesian Model / Volker Wieland -- Sources of Uncertainty in Conducting Monetary Policy in Chile / Felipe Morandé and Mauricio Tejada -- Inflation Dynamics in a Small Open Economy Model under Inflation Targeting: Some Evidence from Chile / Marco Del Negro and Frank Schorfheide -- Overoptimism, Boom-Bust Cycles and Monetary Policy in Small Open Economies / Manuel Marfán, Juan Pablo Medina and Claudio Soto.