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• W1569755732 abstract "Since Keynes no economist would deny that expectations under uncer- tain conditions matter for the conduct of monetary policy, but still opin- ions about their formation are diverse. We build a hybrid New Keynesian Framework to analyze the influence of model uncertainty on optimal in- terest rates under di¤erent degrees of rational forward-looking behavior, using recently developed robust control techniques. Impulse response functions illustrate that uncertainty seems to be a rationale for more aggressive interest rate reactions, but also suggest that the degree of forward-looking behavior seems to be more important than an appro- priate fear about the misspecification of a given model. Furthermore, we argue that assuming to control inflation through expectations is a policy on the razor's edge, since robust expectations overestimate shock impacts. This questions the gains from commitment under uncertainty." @default.
• W1569755732 created "2016-06-24" @default.
• W1569755732 creator A5068859459 @default.
• W1569755732 date "2007-10-01" @default.
• W1569755732 modified "2023-09-27" @default.
• W1569755732 title "Robust Control and Persistence in the New Keynesian Economy" @default.
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• W1569755732 hasPublicationYear "2007" @default.
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