uncertainty about the model’s structural parameters. We consider a Bayesian policymaker who assesses the effectiveness of policy …

be derived by quadratic approximation. This leaves uncertainty in the basic three-equation model. After adding exogenous …, impulse response functions show the adjustments over time after a cost shock. As a result, accounting for uncertainty can lead … to lower interest rates of roughly 25 basis points compared to the case without uncertainty. …

and uncertainty? We build a model where countries disagree on policy targets and how policies affect the economies, and … show that uncertainty not only determines the type of cooperative policy but also whether countries want to cooperate at … all. Countries facing larger model disagreement also need to face larger uncertainty with respect to policy spillovers to …

We examine monetary and fiscal interactions in a monetary union model with uncertainty due to imperfect central bank … transparency. It is first shown that monetary uncertainty discourages excessive taxation and may thus reduce average inflation and … output distortions. However, as countries enter the monetary union, this tax-restraining effect of uncertainty is mitigated …