Book/Printed Material Optimal policy projections
About this Item
Title
- Optimal policy projections
Summary
- "We outline a method to provide advice on optimal monetary policy while taking policymakers' judgment into account. The method constructs Optimal Policy Projections (OPPs) by extracting the judgment terms that allow a model, such as the Federal Reserve Board's FRB/US model, to reproduce a forecast, such as the Greenbook forecast. Given an intertemporal loss function that represents monetary policy objectives, OPPs are the projections - of target variables, instruments, and other variables of interest -that minimize that loss function for given judgment terms. The method is illustrated by revisiting the Greenbook forecasts of February 1997 and November 1999, in each case using the vintage of the FRB/US model that was in place at that time. These two particular forecasts were chosen, in part, because they were at the beginning and the peak, respectively, of the late 1990s boom period. As such, they differ markedly in their implied judgments of the state of the world, and our OPPs illustrate this difference. For a conventional loss function, our OPPs provide significantly better performance than Taylor-rule simulations"--National Bureau of Economic Research web site.
Names
- Svensson, Lars E. O.
- Tetlow, Robert J.
- National Bureau of Economic Research
Created / Published
- Cambridge, MA : National Bureau of Economic Research, c2005.
Headings
- - Economic forecasting--United States
- - Monetary policy--United States
Notes
- - Title from PDF file as viewed on 6/21/2005.
- - Includes bibliographical references.
- - Also available in print.
- - Mode of access: World Wide Web.
- - System requirements: Adobe Acrobat Reader.
Call Number/Physical Location
- HB1
Digital Id
- https://hdl.loc.gov/loc.gdc/gdcebookspublic.2005618238
- http://papers.nber.org/papers/W11392 External
Library of Congress Control Number
- 2005618238
Access Advisory
- Unrestricted online access
Online Format
- image