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A normative approach to economic uncertainty estimation

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General Information Cached
Title
A normative approach to economic uncertainty estimation
Type
Article
Main Author
Pei, Tha Gan
Additional Authors
  • Siew, Yong Lim
  • Han, Yu
  • Mohd Yahya Mohd Hussin
  • Fidlizan Muhammad
Subject
HB Economic Theory
ISSN
2232-0032/eISSN 0128-0481
Language Code
eng
Bibliographic Details
Place of Production
Tanjong Malim
Publisher
Fakulti Pengurusan dan Ekonomi
Year of publication
2013
Notes
Vol. 3 (2013): Journal of Contemporary Issues and Thought (JCIT)
Degree Type
Others
Corporate Name
Perpustakaan Tuanku Bainun

Abstract

A notable feature of the empirical studies on economic uncertainty index is that almost all published papers rely on the approximate form of economic uncertainty index, a method substantially used the variability measures, which is moving sample standarddeviation type. It can, therefore, not be ruled out for the refusal of economic uncertainty index precision is simply the outcome of a misspecification of a commonly used model and an elaborate data snooping process. In order to overcome these limitations, the paper considers the theoretical and practical that must be contented to construct the best economic uncertainty index, while considering Islamic rate as monetary policy instrument. Using the proposed grid search optimization procedure, the best economic uncertainty index anticipates that: (i) it can characterize the certainty of macroeconomic conditions in conformity with the expectation and (ii) it can serve as a guiding policy tool for improving certainty in macroeconomic conditions. Keywords Grid search, optimal economic uncertainty, Islamic monetary policy

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