Which Parameters Drive Approximation Inaccuracies?
- Angeblicher Autor
-
Sienknecht, Sebastian (Economist)
- Erschienen
- 2010-12-15
- Nummer des Discussion-Papers
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2010-093
- Schlagwort(e)
-
Approximations
Optimal Monetary policy
Timeless Perspective
Welfare Analysis
- Zusammenfsg.
-
This paper identifies parameters responsible for welfare reversals when the basic New Keynesian model is approximated. In our setting, a reversal occurs when the Ramsey policy under timeless perspective commitment ceases to be dominant against the Taylor rule after approximating the model. We find that the parameters involved are the degree of persistence in the autoregressive shock process and the labor elasticity of real output.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- JEL-Classification for JER
- E30 - General ; E52 - Monetary Policy ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
