The Macroeconomic Loss Function: A Critical Note

Arbeitspapier

The standard loss function gives the same weight to positive and negative deviations from the output and inflation targets. This short note criticizes this symmetry assumption. If the period covered is long enough output growth in excess of the target, and often also inflation rates that are below target, should be counted as gains instead of losses.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 02-2

Classification and Topics

• Classification: Wirtschaft ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
• Subject: Loss functions ; macro policy evaluation ; Volkswirtschaftlicher Schaden ; Bewertung ; Gesamtwirtschaftliche Produktion ; Inflation ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mayer, Thomas
• Event: Veröffentlichung
• (who): University of California, Department of Economics
• (where): Davis, CA
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/79417