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Central Banker's Behaviour in an Uncertain Environment

34 Pages Posted: 28 Aug 2010  

Sanvi Avouyi-Dovi

Banque de France

Jean-Guillaume Sahuc

Banque de France

Date Written: July 1, 2009


Several recent papers are devoted to the examination of the central banker's behaviour in an uncertain economic environment. This paper proposes, from a central banker's point of view, a synthesis of the main sources of uncertainty as well as an illustration of their effects within an analytical framework. In particular, it shows that depending on the type of uncertainty and the choice of the selected loss function, the recommendations for monetary policy can be noticeably different. Retaining an ad hoc loss function - discretionary choice - in place of an endogenous loss function - choice consistent with the structural parameters - can involve considerable welfare losses.

Notes: Downloadable document is in French.

Keywords: Monetary policy, Uncertainty, Macroeconomic Model

JEL Classification: D81, E52, E61

Suggested Citation

Avouyi-Dovi, Sanvi and Sahuc, Jean-Guillaume, Central Banker's Behaviour in an Uncertain Environment (July 1, 2009). Banque de France Working Paper No. 241. Available at SSRN: or

Sanvi Avouyi-Dovi (Contact Author)

Banque de France ( email )


Jean-Guillaume Sahuc

Banque de France ( email )

31 rue Croix des Petits Champs
75049 Paris Cedex 01
+33 1 42 92-49-52 (Phone)
+33 1 42-92-62-92 (Fax)

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