We study the effects of changes in uncertainty about future fiscal policy on aggregate economic activity. Fiscal … consolidation inevitable, there is considerable uncertainty about the policy mix and timing of such budgetary adjustment. To … evaluate the consequences of this increased uncertainty, we first estimate tax and spending processes for the U.S. that allow …

. We decompose the VIX into two components, a proxy for risk aversion and expected stock market volatility ("uncertainty … monetary policy decreases risk aversion after about five months. Monetary authorities react to periods of high uncertainty by …

and uncertainty play a central role. At the heart of our story is a Federal Reserve that learns and then disregards the … favour a model where policy reacts to uncertainty over a model where uncertainty is ignored. The posterior likelihood is …

compare these optimal rules against plausible alternatives. Model uncertainty is shown to be a substantial problem; the … rules are robust to model uncertainty may be an overly sanguine conclusion. …

We study the pricing of political uncertainty in a general equilibrium model of government policy choice. We find that … political uncertainty commands a risk premium whose magnitude is larger in poorer economic conditions. Political uncertainty …

, uncertainty makes reforms more politically viable and may, under some conditions, increase social welfare. The model is then used … uncertainty is associated to more reforms in a panel of 20 OECD countries. …