Jordan, Thomas J. Kugler, Peter Lenz, Carlos Savioz, Marcel R.
Year of Publication:
WWZ Discussion Paper 2005/10
This paper analyzes forward-looking monetary policy rules in structural VAR's. First, an approach for modeling a monetary policy which aims at a strict medium term inflation or output growth target is developed. Second, the ex ante inflation-output-growth volatility trade-off for a forward-looking policy aiming at a convex combination these strategies is derived. Finally, an illustration of our approach using Swiss data is given.
Structural VAR forward-looking monetary policy efficiency frontier