TY  - JOUR
AU  - Adolfson,Malin
AU  - Laseen,Stefan
AU  - Linde,Jesper
AU  - Svensson,Lars E.O.
TI  - Optimal Monetary Policy in an Operational Medium-Sized DSGE Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14092
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14092
L1  - http://www.nber.org/papers/w14092.pdf
N1  - Author contact info:
Malin Adolfson
Sveriges Riksbank
SE-103 37 Stockholm
Sweden
Tel: 46-8-787-04-96
Fax: 46-8-21-0531
E-Mail: malin.adolfson@riksbank.se

Stefan Laseen
Sveriges Riksbank
SE-103 37 Stockholm
Sweden
E-Mail: stefan.laseen@riksbank.se

Jesper Linde
International Finance, mailstop 20
Federal Reserve Board
20th and C streets
Washington, NW
DC, 20551, USA
E-Mail: Jesper.L.Linde@frb.gov

Lars E.O. Svensson
Sveriges Riksbank
SE-103 37 Stockholm
Sweden
Tel: +46 8 787 0107
Fax: +46 8 21 0531
E-Mail: svensson@princeton.edu
AB  - We show how to construct optimal policy projections in Ramses, the Riksbank's open-economy medium-sized DSGE model for forecasting and policy analysis. Bayesian estimation of the parameters of the model indicates that they are relatively invariant to alternative policy assumptions and supports that the model may be regarded as structural in a stable low inflation environment. Past policy of the Riksbank until 2007:3 (the end of the sample used) is better explained as following a simple instrument rule than as optimal policy under commitment. We show and discuss the differences between policy projections for the estimated instrument rule and for optimal policy under commitment, under alternative definitions of the output gap, different initial values of the Lagrange multipliers representing policy in a timeless perspective, and different weights in the central-bank loss function.
ER  -