A normative approach to economic uncertainty estimation

Pei, Tha Gan

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Type :	Article
Subject :	HB Economic Theory
ISSN :	2232-0032/eISSN 0128-0481
Main Author :	Pei, Tha Gan
Additional Authors :	Siew, Yong Lim Han, Yu Mohd Yahya Mohd Hussin Fidlizan Muhammad
Title :	A normative approach to economic uncertainty estimation
Hits :	2

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)
Corporate Name :	Perpustakaan Tuanku Bainun
PDF Full Text :	You have no permission to view this item.

Abstract : Perpustakaan Tuanku Bainun

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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