Monetary Policy Loss Functions: Two Cheers for the Quadratic

Bank of England Monetary Analysis Working Paper No. 101

45 Pages Posted: 14 Oct 1999

See all articles by Jagjit S. Chadha

Jagjit S. Chadha

University of St. Andrews - School of Management

Philip Schellekens

Massachusetts Institute of Technology (MIT) - Department of Economics

Date Written: September 1999

Abstract

The implications for optimal monetary policy of relaxing the normal assumption of a quadratic loss function are examined. Several alternative specifications are considered, but the results suggest that the convenient assumption of quadratic losses may not be that drastic.

JEL Classification: E52

Suggested Citation

Chadha, Jagjit S. and Schellekens, Philip, Monetary Policy Loss Functions: Two Cheers for the Quadratic (September 1999). Bank of England Monetary Analysis Working Paper No. 101, Available at SSRN: https://ssrn.com/abstract=186149 or http://dx.doi.org/10.2139/ssrn.186149

Jagjit S. Chadha (Contact Author)

University of St. Andrews - School of Management ( email )

The Gateway
Gateway
St. Andrews, Fife KY16 9SS
United Kingdom
+44 1334 462440 (Phone)

HOME PAGE: http://www.st-andrews.ac.uk/economics/staff/pages/j.chadha.shtml

Philip Schellekens

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States