Uncertainty and Multiple Paradigms of the Transmission Mechanism

Walter Engert and Jack Selody

Staff Working Papers from Bank of Canada

Abstract: An important challenge facing central banks is making decisions under uncertainty about the dynamic effects of monetary policy actions. The authors stress the importance of explicitly recognizing uncertainty about the transmission mechanism when formulating policy advice. They argue that one way to manage monetary policy under uncertainty is to draw on both an output-gap paradigm and a money paradigm of the transmission mechanism to inform decision-making. Taking an eclectic, diversified approach to guide policy judgements could improve the policy outcome.

Keywords: Monetary policy framework; Uncertainty and monetary policy (search for similar items in EconPapers)
JEL-codes: C1 E27 (search for similar items in EconPapers)
Pages: 32 pages
Date: 1998
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:98-7

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