Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152462
Authors: 
Ellison, Martin
Valla, Natacha
Year of Publication: 
2000
Series/Report no.: 
ECB Working Paper 28
Abstract: 
In this paper we examine the optimal level of central bank activism in a standard model of monetary policy with uncertainty, learning and strategic interactions. We calibrate the model using G7 data and find that the presence of strategic interactions between the central bank and private agents creates an additional motivation for caution in optimal monetary policy. An active policy designed to help learning and reduce future uncertainty creates extra volatility in inflation expectations, which is detrimental to welfare.
JEL: 
D81
D83
D84
E52
E58
Document Type: 
Working Paper

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