Template-Type: ReDIF-Paper 1.0
Author-Name: Thomas Mayer
Author-Name-First: Thomas
Author-Name-Last: Mayer
Author-Workplace-Name: Department of Economics, University of California Davis
Title: The Macroeconomic Loss Function: A Critical Note
Abstract: The standard loss function gives the same weight to positive and negative deviations from the output and inflation targets. This short note criticizes this symmetry assumption. If the period covered is long enough output growth in excess of the target, and often also inflation rates that are below target, should be counted as gains instead of losses.
Length: 6
File-URL: https://repec.dss.ucdavis.edu/files/GbtTq1sjU7CD9eDQFnt5Hrn1/02-2.pdf
File-Format: application/pdf
Number: 5
Classification-JEL: E61, E50, E37
KeyWords: Loss functions, macro policy evaluation
Creation-Date: 20030115
Handle: RePEc:cda:wpaper:5