Download or read book Robust Versus Optimal Rules in Monetary Policy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2004-06-01 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a framework for analyzing the choice between optimal and robust monetary policy rules in the presence of paradigm uncertainty. We first discuss the conditions on uncertainty that render a robust rule preferable to an optimal rule. Second, we show how the degree of risk aversion of the policymaker increases the region in which the robust rule is preferred.