We find that macroeconomic uncertainty plays a significant role in U.S. monetary policy. First, we construct a measure … of uncertainty as felt by policymakers at the time of making their rate-setting decisions. This measure is derived from a … of being in a high-uncertainty regime. Second, we estimate a monetary policy reaction function that, apart from …

other? This paper looks at the basic structural facts, the nature of uncertainty shocks, and the efficiency of policy tools … in the two economies. The key to understanding recent developments is uncertainty. This paper argues that the channel … through which uncertainty influences inflation, wage cost, and unemployment is the markup firms charge to cover their cost of …