Should Macroeconomic Policy Makers Consider Parameter Covariances?
Computational Economics
Dynamic Programming and Optimal Control
Dynamic Programming and Optimal Control
The Timing of Uncertainty and the Intensity of Policy
Computational Economics
Robust Control: A Note on the Timing of Model Uncertainty
Computational Economics
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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.