Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25389
Authors: 
Levin, Andrew
Wieland, Volker
Williams, John C.
Year of Publication: 
2003
Series/Report no.: 
CFS Working Paper 2003/06
Abstract: 
We investigate the performance of forecast-based monetary policy rules using five macroeconomic models that reflect a wide range of views on aggregate dynamics. We identify the key characteristics of rules that are robust to model uncertainty: such rules respond to the one- year-ahead inflation forecast and to the current output gap and incorporate a substantial degree of policy inertia. In contrast, rules with longer forecast horizons are less robust and are prone to generating indeterminacy. Finally, we identify a robust benchmark rule that performs very well in all five models over a wide range of policy preferences.
Subjects: 
Inflation forecast targeting
optimal monetary policy
JEL: 
E31
E52
E58
E61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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