Arbeitspapier
Should central banks be more aggressive?
Simple models of monetary policy often imply optimal policy behavior that is considerably more aggressive than what is commonly observed. This paper argues that such counterfactual implications are due to model restrictions and a failure to account for multiplicative parameter uncertainty, rather than to policymakers being too cautious in their implementation of policy. Comparing a restricted and an unrestricted version of the same empirical model, the unrestricted version leads to less volatility in optimal policy, and, taking parameter uncertainty into account, to policy paths very close to actual Federal Reserve policy.
- Language
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Englisch
- Bibliographic citation
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Series: Sveriges Riksbank Working Paper Series ; No. 84
- Classification
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Wirtschaft
Monetary Policy
Central Banks and Their Policies
- Subject
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Optimal monetary policy
parameter uncertainty
interest rate smoothing
- Event
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Geistige Schöpfung
- (who)
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Söderström, Ulf
- Event
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Veröffentlichung
- (who)
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Sveriges Riksbank
- (where)
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Stockholm
- (when)
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1999
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Söderström, Ulf
- Sveriges Riksbank
Time of origin
- 1999