The smoothing impact of fiscal stabilizers (proxied by government expenditures) on business cycle volatility is studied for a panel of European Union (EU) countries in the period 1970-1999. Special emphasis is put on the investigation of possible nonlinearities in the relationship between Gross...

The paper describes the challenges that uncertainty over the true value of key macroeconomic variables poses for policymakers and the way in which they may form and update their priors in light of a range of indicators. SpeciÂ…cally, it casts the data uncertainty challenge in state space form...