Monetary policy under uncertainty in WAEMU: parsimonious model and central bank preferences

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Periodical article

Title:	Monetary policy under uncertainty in WAEMU: parsimonious model and central bank preferences
Author:	Nantob, N'Yilimon
Year:	2015
Periodical:	African Development Review (ISSN 1467-8268)
Volume:	27
Issue:	3
Pages:	230-247
Language:	English
Geographic term:	West Africa
Subjects:	Union Economique et Monétaire Ouest-Africaine monetary policy economic models
External link:	https://doi.org/10.1111/1467-8268.12143
Abstract:	This paper looks at the implications of monetary policy uncertainty in the WAEMU area over the period 1975-2010. Under uncertainty on the transmission mechanisms, the monetary policy must be cautious according to the 'Brainard conservatism principle'. Using the linear quadratic stochastic control approach by introduction the variance covariance matrix of the estimated parameters in the optimal control theory the results through the optimal monetary policy rule yield that the policy-makers are always very cautious when they have an inflation and output gap stabilization objective. However, when they are concerned to smooth interest rate, their behavior becomes distinctly more aggressive. Bibliogr., notes, ref., sum. [Journal abstract]