Evaluating Alternative Monetary Policy Rules

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Published in RePEc

Abstract

This paper examines monetary policy from an optimal control perspective. Three loss functions are minimized for each of three models, and the results are compared. The three loss functions target nominal growth, real growth, and inflation, respectively. The three models are a small structural model, a VAR model, and a large structural model. A numerical procedure is presented that can handle a variety of loss functions and models.

Keywords

SMALL STRUCTURAL MODEL
EVALUATING ALTERNATIVE
ALTERNATIVE MONETARY
EXAMINES MONETARY
LARGE STRUCTURAL
MONETARY POLICY
OPTIMAL CONTROL
POLICY RULES
INFLATION

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