Adalid, Ramon and Coenen, Gunter and McAdam, Peter and Siviero, Stefano (2005) The Robustness of Interest Rate Rules In Models of The Euro Area. International Journal of Central Banking, 1 (1). pp. 95-132. (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)
In this paper, we examine the performance and robustness of optimized interest-rate rules in four models of the euro area that differ considerably in terms of size, degree of aggregation, relevance of forward-looking behavioral elements, and adherence to microfoundations. Our findings are broadly consistent with results documented for models of the U.S. economy: backward-looking models require relatively more aggressive policies with, at most, moderate inertia; rules that are optimized for such models tend to perform reasonably well in forward-looking models, while the reverse is not necessarily true; and, hence, the operating characteristics of robust rules (i.e., rules that perform satisfactorily in all models) are heavily weighted towards those required by backward-looking models.
|Subjects:||H Social Sciences|
|Divisions:||Faculties > Social Sciences > School of Economics|
|Depositing User:||G.F. Green|
|Date Deposited:||29 Sep 2008 13:55|
|Last Modified:||09 May 2014 14:25|
|Resource URI:||https://kar.kent.ac.uk/id/eprint/9427 (The current URI for this page, for reference purposes)|