Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88714
Authors: 
Bursian, Dirk
Roth, Markus
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper Series 30
Abstract: 
We examine whether the robustifying nature of Taylor rule cross-checking under model uncertainty carries over to the case of parameter uncertainty. Adjusting monetary policy based on this kind of cross-checking can improve the outcome for the monetary authority. This, however, crucially depends on the relative welfare weight that is attached to the output gap and also the degree of monetary policy commitment. We find that Taylor rule cross-checking is on average able to improve losses when the monetary authority only moderately cares about output stabilization and when policy is set in a discretionary way.
Subjects: 
Optimal monetary policy
parameter uncertainty
Taylor rule
JEL: 
E47
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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