uncertainty and have a negative “sand†effect. This paper studies the grease effect of inflation by looking at whether the …

Extending recent theoretical contributions on sources of inflation inertia, we argue that monetary uncertainty accounts …

Under a Bayesian framework of model uncertainty, closed economy models of monetary policy typically suggest that policy … responses should be attenuated. Conversely, under a Knightian view of uncertainty, where the policymaker cannot specify …, qualitatively the models recommend standard results: policy attenuation if the policymaker maintains a Bayesian view of uncertainty …