Computational Economics

, Volume 27, Issue 4, pp 483–496 | Cite as

Parameter Uncertainty and Policy Intensity: Some Extensions and Suggestions for Further Work

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Abstract

The effects of parameter uncertainty on optimal policy have been a matter of interest for academics, and even for some policymakers, for a long time. Two lines of literature have developed analytical results on this matter. The first line uses static models and the second dynamic models. In this dynamic line most of the results are confined to models with a single state and a single control variable.

In this paper we want to encourage the analysis of more general dynamic cases. To do so, the results in the dynamic line are extended from one-state and one-control finite horizon models to models with a pair of control variables. We then discuss some of the hurdles which must be surmounted for the results to be made more general and suggests some lines for further research.

Key words

stochastic control policy uncertainty macroeconomic policy 
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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of TexasAustinUSA
  2. 2.IDESBuenos AiresArgentina

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