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Avoiding Nash Inflation: Bayesian and Robust Response to Model Uncertainty
Avoiding Nash Inflation: Bayesian and Robust Response to Model Uncertainty

Avoiding Nash Inflation: Bayesian and Robust Response to Model Uncertainty in Bloomington, MN

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This paper considers the design of monetary policy under uncertainty. Specifically, we usea simple model to jointly consider three things: learning by the monetary authority; model misspecification; and robust policies to counter the misspecification problems. To the best of ourknowledge, this is the first paper to simultaneously consider these crucial elements of real-world policy design.
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