Resource title

Central bank learning and monetary policy

Resource image

image for OpenScout resource :: Central bank learning and monetary policy

Resource description

We analyze optimal monetary policy when a central bank has to learn about an unknown coefficient that determines the effect of surprise inflation on aggregate demand. We derive the optimal policy under active learning and compare it to two limiting cases-certainty equivalence policy and cautionary policy, in which learning takes place passively. Our novel result is that the two passive learning policies represent an upper and lower bound for the active learning policy, irrespective of the state of the economy.

Resource author

Mewael F. Tesfaselassie

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24839

Resource license

Adapt according to the presented license agreement and reference the original author.