Monetary Policy Loss Functions: Two Cheers for the Quadratic
Bank of England Monetary Analysis Working Paper No. 101
45 Pages Posted: 14 Oct 1999
Date Written: September 1999
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: Suggested Citation