Robust versus Optimal Rules in Monetary Policy: A note

We provide a framework for analysing the choice between optimal and robust rules in the presence of paradigm uncertainty in monetary policy. We thus provide for two issues: …rst, we discuss the conditions of uncertainty that render a robust rule a preferable substitute to optimal rules and second, we show how the degree of risk aversion increases the desirability of robust rules.Model Uncertainty, Monetary Policy, Optimal Policy Rules