Title: On the existence of loss function for some useful classes of central bankers
Author: Marcelo de Carvalho Griebeler
Address: Faculdade de Ciências Econômicas, Departamento de Ciências Econômicas e Relações Internacionais, Universidade Federal do Rio Grande do Sul, Avenida João Pessoa 52, Centro Histórico, 90040-000 – Porto Alegre, RS – Brazil
Abstract: We provide several types of central banker's preferences according to their monetary policy choices. Although not exhaustive, our list covers from extreme (conservative and populist) to moderate behaviours, such that it is flexible in relation to the degree of conservativeness, as well as in relation to monetary regimes. We also use the traditional axiomatic approach for utility representation in order to investigate which of those preferences admit numerical representation. Our main finding states that so called stabiliser central bank is the only that admits representation through utility. Nevertheless, we show that even preferences without utility representation may be useful as alternatives for studies which propose different types of central bank.
Keywords: central banks; banker preferences; monetary policy; loss function; banker behaviour; banking industry; utility representation.
Int. J. of Monetary Economics and Finance, 2015 Vol.8, No.3, pp.229 - 241
Submission date: 12 Sep 2014
Date of acceptance: 05 Feb 2015
Available online: 09 Oct 2015