Paper models link between policy uncertainty and growth

Rates uncertainty

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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