Optimal monetary policy in an operational medium-sized DSGE model
By: Malin Adolfson, Stefan Laseen, Jesper Linde, Lars E.O. Svensson.
Contributors: Laseen, Stefan.; Linde, Jesper.; Svensson, Lars E.O.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 14092; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 14092.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for forecasting and policy analysis.  Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports that the model may be regarded as structural in a stable low inflation environment.  Past policy of the Riksbank until 2007:3 (the end of the sample used) is better explained as following a simple instrument rule than as optimal policy under commitment.  We show and discuss the differences between policy projections for the estimated instrument rule and for optimal policy under commitment, under alternative definitions of the output gap, different initial values of the Lagrange multipliers representing policy in a timeless perspective, and different weights in the central-bank loss function"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 7/14/2008.

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