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important source of uncertainty is the relationship between inflation and unemployment. This paper studies the optimal monetary … policy in the presence of uncertainty about the natural unemployment rate, the short-run inflation-unemployment tradeoff and …, uncertainty provides a motive for the policymaker to move more cautiously than she would if she knew the true parameters. In the …
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This paper studies the design of optimal time-consistent monetary policy in an economy where the planner trusts its own model, while a representative household uses a set of alternative probability distributions governing the evolution of the exogenous state of the economy. In such environments,...
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