Published on VOX.org, by Knut Are Aastveit, Gisle James Natvik, Sergio Sola, October 19, 2013.
Many analysts blame uncertainty for at least part of advance nations’ poor economic performance since the crisis. This column discusses new research showing that the economic impact of monetary policy is dampened when uncertainty is high. This means that high uncertainty forces monetary policymakers into a trade-off between acting decisively and acting correctly as policy must be more aggressive than otherwise in order to stabilise economic activity. The finding is particularly stark when uncertainty measures from financial markets are utilised. Continuer la lecture de « Economic uncertainty and the effectiveness of monetary policy »