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 )

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Philip Schellekens

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

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