Designing a Simple Loss Function for Central Banks

Does a Dual Mandate Make Sense?

Designing a Simple Loss Function for Central Banks
Yes, it makes a lot of sense. This paper studies how to design simple loss functions for central banks, as parsimonious approximations to social welfare. We show, both analytically and quantitatively, that simple loss functions should feature a high weight on measures of economic activity, sometimes even larger than the weight... READ MORE...

Publication date: July 2017
ISBN 9781484309278
$18.00

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