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http://hdl.handle.net/10419/24839
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| Title: | | Central bank learning and monetary policy  |
| Authors: | | Tesfaselassie, Mewael F. |
| Issue Date: | | 2008 |
| Citation: | | [Series:] Kiel working paper [No.:] 1444 [Editor:] Kiel Inst. for the World Economy, Kiel |
| Series/Report no.: | | Kiel working paper 1444 |
| Abstract: | | We analyze optimal monetary policy when a central bank has to learn about an unknown coefficient that determines the effect of surprise inflation on aggregate demand. We derive the optimal policy under active learning and compare it to two limiting cases-certainty equivalence policy and cautionary policy, in which learning takes place passively. Our novel result is that the two passive learning policies represent an upper and lower bound for the active learning policy, irrespective of the state of the economy. |
| Subjects: | | Parameter uncertainty learning monetary policy |
| JEL: | | C02 E52 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Kieler Arbeitspapiere, IfW Economists Online
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