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

Borradores de Economia
Número: 
814
Publicado: 
Clasificación JEL: 
D81, E52, E58
Palabras clave: 
Prudence, Robustness, Measurement error, Optimal Monetary 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