Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209948
Authors: 
Bache, Ida Wolden
Brubakk, Leif
Maih, Junior
Year of Publication: 
2010
Series/Report no.: 
Working Paper No. 2010/03
Abstract: 
We estimate a small open-economy DSGE model for Norway with two specifications of monetary policy: a simple instrument rule and optimal policy based on an intertemporal loss function. The empirical fit of the model with optimal policy is as good as the model with a simple rule. This result is robust to allowing for misspecification following the DSGE-VAR approach proposed by Del Negro and Schorfheide (2004). The interest rate forecasts from the DSGE-VARs are close to Norges Bank's official forecasts since 2005. One interpretation is that the DSGE-VAR approximates the judgment imposed by the policymakers in the forecasting process.
Subjects: 
DSGE models
forecasting
optimal monetary policy
JEL: 
C53
E52
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-546-5
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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