Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82440
Authors: 
Lindé, Jesper
Year of Publication: 
2000
Series/Report no.: 
Sveriges Riksbank Working Paper Series 114
Abstract: 
In this paper, I investigate quantitatively how sensitive a typical backward-looking model used in monetary plicy analysis is to the Lucas critique. To do this, I use an equilibrium business cycle model with a Taylor-type rule for nominal money growth. The backward-looking model displays considerable parameter instability, both from a statistical and economic point of view, when the parameters in the estimated monetary policy ruel change. THe findings suggest that the robustness of the conclusions in the literature on the relative merits of an alternative monetary policy rules should be checked in an equilibrium framework.
Subjects: 
Lucas critique
Real business cycle model
Taylor rules
Aggregate supply
Aggregate demand
JEL: 
C22
C52
E41
Document Type: 
Working Paper

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