NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary Policy in an Uncertain Environment

Martin Feldstein

NBER Working Paper No. 9969
Issued in September 2003
NBER Program(s):   ME

This paper discusses the nature of the uncertainty faced by central banks and considers three approaches to dealing with uncertainty(1) formal optimization models and robust rules based on such models; (2) informal rules like the Taylor rule and inflation targeting; and (3) a case by case approach based on an informal Bayesian logic. The latter case requires considering the asymmetric nature of the risks that the central bank often faces.

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Document Object Identifier (DOI): 10.3386/w9969

Published: Martin Feldstein, 2003. "Monetary policy in an uncertain environment," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 373-382.

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