Title: Optimal monetary policy under uncertainty in dsge models
First published: 2008
Description: "We study the design of optimal monetary policy under uncertainty in a dynamic stochastic general equilibrium models.  We use a Markov jump-linear-quadratic (MJLQ) approach to study policy design, approximating the uncertainty by different discrete modes in a Markov chain, and by taking mode-dependent linear-quadratic approximations of the underlying model.  This allows us to apply a powerful methodology with convenient solution algorithms that we have developed.  We apply our methods to a benchmark New Keynesian model, analyzing how policy is affected by uncertainty, and how learning and active experimentation affect policy and losses"--National Bureau of Economic Research web site.
LC classification: HB1