Paper models link between policy uncertainty and growth
Bank of Luxembourg paper looks at how investors adjust their estimates of monetary policy
Uncertainty over monetary policy causes slowdowns in GDP growth by influencing private investment decisions, a working paper published by the Central Bank of Luxembourg finds.
In Learning, expectations and monetary policy, Pablo Garcia presents “a New Keynesian model in which the central bank’s anti-inflationary preferences change over time”. He tries to explain the possible link between monetary policy uncertainty and economic contractions, documented in a 2019 paper by Husted, Rogers and Sun
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