surrounding the effects of rule-based monetary policy on unemployment dynamics in the euro area and the US. We employ a Bayesian … policy ; model uncertainty ; Bayesian model averaging ; unemployment gap ; Taylor rule …

deviate from the strict inflation targeting since the policy maker faces a typical unemployment/inflation trade-off. In this … (hence the output gap) since the latter also depends on the evolution of unemployment. The matching frictions add a … matches. Hence optimal monetary policy features unemployment targeting along with inflation targeting …

minimize fluctuations of unemployment around its natural rate but are uncertain about the economy's natural rates of interest … and unemployment and how private agents form expectations. In particular, we consider two models of expectations formation …, and a smaller response to the perceived unemployment gap than would be optimal if everyone had perfect knowledge of the …