Volumen 13: Monetary Policy under Uncertainty and Learning


Huge swings in oil, food, and other commodity prices and the global financial crisis are at the core of current monetary policy discussion. The latter events are vivid reminders of how uncertainty, imperfect knowledge, and the need to learn affect macroeconomic behavior and the conduct of monetary policy. Central bank and academic economists conducting research on the design of monetary policy have made significant advances in recent years. However, ongoing limitations of economic theory and data, structural changes in the economy, the inherent unobservability of key macro variables, and disagreements about the right model of the transmission of monetary policy imply that central bankers operate in an environment of both conventional and Knightian uncertainty. Hence economists and policymakers are engaged in continuous learning about the economy. At the same time, the public forms its expectations based on its evolving understanding of the economy and the policymakers' behavior. In this volume, leading international scholars address many of the key issues relevant to central bankers taking decisions under conditions of uncertainty and learning. The 14 essays in this volume offer both theoretical insights and international empirical results on the conduct of monetary policy under uncertainty and learning. The volume also addresses key issues on monetary policy conduct and results in Chile. Editado por Klaus Schmidt-Hebbel y Carl E. Walsh.




"The global financial crisis is a powerful reminder of how uncertainty affects the effectiveness and design of demand policies .
This book offers a unique collection of contributions that throw light on how monetary authorities can best set, operate and communicate policy when their information about the economy and shocks is imperfect and learning is underway. Undoubtedly a must-read for policymakers and scholars alike as we slide further into unchartered economic territory."

Nicoletta Batini, lnternational Monetary Fund

"Two of the most pervasive features of the practice of monetary policy are uncertainty and learning. 80th policymakers and the public have imperfect knowledge about the governing structural relations of the economy, as well as the value of key macroeconomic variables at the time when decisions have to be made. Consequently, both uncertainty and learning affect the way monetary policy is conducted. This book provides important theoretical insights by leading scholars and practitioners about the robustness of traditional monetary policy schemes and the construction of new ones that explicitly take into account uncertainty and learning. This collection also offers several empirical assessments of how some dimensions of uncertainty affect the performance of monetary policy. The book is a must for both scholars and practitioners."

Vittorío Corbo, Centro de Estudios Públicos and former Governor of the Central Bank of Chile 

"This impressive and timely volume is about how economic actors and policy makers should and do characterize and cope with uncertainties about events and models. These state of the art articles provide good views of the role of the most promising approaches - Bayesian methods for hidden Markov models, adaptive models incorporating least squares learning, models of costly information processing, and even decision making with multiple priors. Recent events have made the issues discussed here only more important."

Thomas Sargent, New York University