Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/123351 
Year of Publication: 
2005
Series/Report no.: 
WWZ Discussion Paper No. 2005/05
Publisher: 
University of Basel, Center of Business and Economics (WWZ), Basel
Abstract: 
This paper analyzes forward-looking rules for Swiss monetary policy in a small structural VAR model consisting of four variables taking into account data revisions for GDP. First, the paper develops an analytical method to analyze the effect of data revision errors in GDP on the ex ante or conditional inflation-output-growth volatility trade-off and applies it to Swiss data. Second, the effects of different targets in a forward-looking monetary policy on ex post or unconditional volatility of inflation and output growth is explored by a simulation exercise. In general, the results obtained suggest that focusing monetary policy on GDP growth instead on inflation may lead to an inefficient policy with both increased medium term inflation and GDP growth volatility in the presence of GDP data revisions.
Subjects: 
Structural VAR
forward-looking monetary policy
efficiency frontier
GDP data revisions
JEL: 
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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