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Article: Probing potential output: Monetary policy, credibility, and optimal learning under uncertainty

TitleProbing potential output: Monetary policy, credibility, and optimal learning under uncertainty
Authors
KeywordsMonetary policy
Credibility
Probing
Potential output
Uncertainity
Issue Date2003
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jmacro
Citation
Journal of Macroeconomics, 2003, v. 25 n. 3, p. 311-330 How to Cite?
AbstractThe effective conduct of monetary policy is complicated by uncertainty about the level of potential output. One possible response is for the central bank to “probe,” interpreted here as actively using its policy to learn about the level of potential output. I consider a simple calibrated model in the Canadian context and examine the relationship between credibility and optimal probing. For plausible parameter values, the optimal amount of probing is small and diminishes slightly as credibility rises. Only for unrealistically low levels of credibility or unrealistically large levels of uncertainty or volatility does the optimal policy diverge significantly from a policy that ignores learning.
Persistent Identifierhttp://hdl.handle.net/10722/48718
ISSN
2015 Impact Factor: 0.714
2015 SCImago Journal Rankings: 0.618
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorYetman, JAen_HK
dc.date.accessioned2008-05-22T04:22:16Z-
dc.date.available2008-05-22T04:22:16Z-
dc.date.issued2003en_HK
dc.identifier.citationJournal of Macroeconomics, 2003, v. 25 n. 3, p. 311-330en_HK
dc.identifier.issn0164-0704en_HK
dc.identifier.urihttp://hdl.handle.net/10722/48718-
dc.description.abstractThe effective conduct of monetary policy is complicated by uncertainty about the level of potential output. One possible response is for the central bank to “probe,” interpreted here as actively using its policy to learn about the level of potential output. I consider a simple calibrated model in the Canadian context and examine the relationship between credibility and optimal probing. For plausible parameter values, the optimal amount of probing is small and diminishes slightly as credibility rises. Only for unrealistically low levels of credibility or unrealistically large levels of uncertainty or volatility does the optimal policy diverge significantly from a policy that ignores learning.en_HK
dc.format.extent327809 bytes-
dc.format.extent234412 bytes-
dc.format.mimetypeapplication/pdf-
dc.format.mimetypeapplication/pdf-
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jmacroen_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsJournal of Macroeconomics. Copyright © Elsevier BV.en_HK
dc.subjectMonetary policyen_HK
dc.subjectCredibilityen_HK
dc.subjectProbingen_HK
dc.subjectPotential outputen_HK
dc.subjectUncertainityen_HK
dc.titleProbing potential output: Monetary policy, credibility, and optimal learning under uncertaintyen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0164-0704&volume=25&issue=3&spage=311&epage=330&date=2003&atitle=Probing+potential+output:+Monetary+policy,+credibility,+and+optimal+learning+under+uncertaintyen_HK
dc.identifier.emailYetman, JA: jyetman@econ.hku.hken_HK
dc.description.naturepostprinten_HK
dc.identifier.doi10.1016/S0164-0704(03)00040-5en_HK
dc.identifier.scopuseid_2-s2.0-0348163707-
dc.identifier.hkuros91334-
dc.identifier.isiWOS:000185117900002-

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