Robust Monetary Policy in the New-Keynesian Framework

  title={Robust Monetary Policy in the New-Keynesian Framework},
  author={Kai Leitemo and U. -B. S{\"o}derstr{\"o}m},
We study the effect of model uncertainty in a New Keynesian open-economy model using robust control techniques. Due to the simple model structure, we are able to solve a version of the robust control problem analytically, and we analyze the separate effects of uncertainty concerning the determination of inflation, output and the exchange rate. We show that an increased central bank preference for robustness can make monetary policy more aggressive or more cautious, depending on the type of… CONTINUE READING
Highly Cited
This paper has 18 citations. REVIEW CITATIONS

From This Paper

Figures, tables, and topics from this paper.
15 Citations
17 References
Similar Papers


Publications referenced by this paper.

Similar Papers

Loading similar papers…