01795nam a2200265 a 4500 1/51287 051115s2007 be u pdd 1 a0eng d 9789279046315 1016-8060 (print) 1725-3187 (online) KC-AI-07-274-EN-C 32872 GR-PeUP ΚΕΤ Αλφαβητική σειρά Tillmann, Peter. Robust monetary policy with the cost channel / Peter Tillmann. Brussels- Belgium: European Comission: Directorate-General for Economic and Financial Affairs, 2007. 30 σ.: πιν. 30 εκ. Recent research argues that model uncertainty leads the central bank to adjust interest rates stronger to exogenous disturbances than under certainty. This paper investigates whether the introduction of a cost channel of monetary transmission, whose presence is empirically supported, changes the impact of model uncertainty on interest rate setting. The basic model is simple enough to facilitate an analytical closed form solution. We find that the presence of the cost channel dampens the effect of model uncertainty on interest rate setting and can even offset the activist policy stance. In this case, the conventional result is reversed and uncertainty induces an attenuated interest rate policy. A richer dynamic model corroborates these findings. Economic Papers European Commission : Directorate-General for Economic and Financial Affairs. Economic Papers May 2007, No 278. European Economy. Economic papers ; 278. INST UNIPILB KET 20090310 EEEP 278 EEEP 278 NOLOAN 23 1 http://ec.europa.eu/economy_finance/publications/publication_summary10325_en.htm