Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/4314 
Full metadata record
DC FieldValueLanguage
dc.contributor.authorTesfaselassie, Mewael F.en
dc.contributor.authorSchaling, Ericen
dc.date.accessioned2009-01-28T14:18:30Z-
dc.date.available2009-01-28T14:18:30Z-
dc.date.issued2008-
dc.identifier.urihttp://hdl.handle.net/10419/4314-
dc.description.abstractIn this paper we analyze disinflation policy when a central bank has imperfect information about private sector inflation expectations but learns about them from economic outcomes, which are in part the result of the disinflation policy. The form of uncertainty is manifested as uncertainty about the effect of past disinflation policy on current output gap. Thus current as well as past policy actions matter for output gap determination. We derive the optimal policy under learning (DOP) and compare it two limiting cases---certainty equivalence policy (CEP) and cautionary policy (CP). It turns out that under the DOP inflation stay between the levels implied by the CEP and the CP. A novel result is that this holds irrespective of the initial level of inflation. Moreover, while at high levels of inherited inflation the DOP moves closer to the CEP, at low levels of inherited inflation the DOP resembles the CP.en
dc.description.abstractIn this paper we analyze disinflation policy when a central bank has imperfect information about private sector inflation expectations but learns about them from economic outcomes, which are in part the result of the disinflation policy. The form of uncertainty is manifested as uncertainty about the effect of past disinflation policy on current output gap. Thus current as well as past policy actions matter for output gap determination. We derive the optimal policy under learning (DOP) and compare it two limiting cases---certainty equivalence policy (CEP) and cautionary policy (CP). It turns out that under the DOP inflation stay between the levels implied by the CEP and the CP. A novel result is that this holds irrespective of the initial level of inflation. Moreover, while at high levels of inherited inflation the DOP moves closer to the CEP, at low levels of inherited inflation the DOP resembles the CP. -- Learning ; inflation expectations ; disinflation policy ; separation principle ; Kalman filter ; optimal controlen
dc.language.isoengen
dc.publisher|aKiel Institute for the World Economy (IfW) |cKielen
dc.relation.ispartofseries|aKiel Working Paper |x1429en
dc.subject.jelE52en
dc.subject.jelF33en
dc.subject.jelC53en
dc.subject.jelE43en
dc.subject.jelC53en
dc.subject.ddc330en
dc.subject.keywordLearningen
dc.subject.keywordInflation Expectationsen
dc.subject.keywordDisinflation Policyen
dc.subject.keywordSeparation Principleen
dc.subject.keywordKalman Filteren
dc.subject.keywordOptimal Controlen
dc.subject.stwInflationsbekämpfungen
dc.subject.stwEntscheidung bei Unsicherheiten
dc.subject.stwInflationserwartungen
dc.subject.stwLernprozessen
dc.subject.stwKontrolltheorieen
dc.subject.stwZustandsraummodellen
dc.subject.stwTheorieen
dc.titleManaging disinflation under uncertainty-
dc.typeWorking Paperen
dc.identifier.ppn571070957en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:ifwkwp:1429en

Files in This Item:
File
Size
309.82 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.