Imperfect knowledge and the pitfalls of optimal control monetary policy
| dc.contributor.author | Orphanides, Athanasios 1965- | |
| dc.contributor.author | Williamson, John | |
| dc.date.accessioned | 2019-11-01T00:04:32Z | |
| dc.date.available | 2019-11-01T00:04:32Z | |
| dc.date.issued | 2009 | |
| dc.identifier.isbn | 978-956-7421-32-9 | |
| dc.identifier.uri | https://hdl.handle.net/20.500.12580/3748 | |
| dc.description | Sixty years ago, Milton Friedman questioned the usefulness of the optimal control approach because of policymakers’ imperfect knowledge of the economy and favored instead a simple rule approach to monetary policy (1947, 1948). These are still live issues, despite the development of powerful techniques to derive and analyze optimal control policies, which central banks use in their large-scale models (see Svensson and Woodford, 2003, Woodford, 2003, Giannoni and Woodford, 2005, Svensson and Tetlow, 2005). Although the optimal control approach provides valuable insights, it also presents problems. In particular, because it assumes a single correctly specified reference model, it ignores important sources of uncertainty about the economy that monetary policymakers face. Robust control methods of the type analyzed by Hansen and Sargent (2007) extend the standard optimal control approach to allow for unspecified model uncertainty, however, these methods are designed for relatively modest deviations from the reference model | |
| dc.format | ||
| dc.format.extent | Sección o Parte de un Documento | |
| dc.format.medium | p. 115-144 | |
| dc.language.iso | eng | |
| dc.publisher | Banco Central de Chile | |
| dc.relation.ispartof | Series on Central Banking, Analysis, and Economic Policies, no. 13 | |
| dc.rights | Attribution-NonCommercial-NoDerivs 3.0 Chile | * |
| dc.rights.uri | http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ | * |
| dc.subject | POLÍTICA MONETARIA | es_ES |
| dc.subject | BANCOS CENTRALES | es_ES |
| dc.title | Imperfect knowledge and the pitfalls of optimal control monetary policy | |
| dc.type.doc | Artículo | |
| dc.file.name | BCCh-sbc-v13-p115_144 |
Files in this item
This item appears in the following Collection(s)
Except where otherwise noted, this item's license is described as Attribution-NonCommercial-NoDerivs 3.0 Chile