Changes in GDP's measurement error volatility and response of the monetary policy rate : two approaches

Borradores de Economia
Number: 
814
Published: 
Classification JEL: 
D81, E52, E58
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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Using a stylized model in which output is measured with error, we derive the optimal policy response to the demand shock signal and to changes in the measurement error volatility from two different perspectives: the minimization of the expected loss (from