Policymaking under uncertainty: Gradualism and robustness

Gadi Barlevy

Economic Perspectives, 2009, vol. 33, issue Q II, 38-55

Abstract: Some economists have recommended the robust control approach to the formulation of monetary policy under uncertainty when policymakers cannot attach probabilities to the scenarios that concern them. One critique of this approach is that it seems to imply aggressive policies under uncertainty, contrary to the conventional wisdom of acting more gradually in an uncertain environment. This article argues that aggressiveness is not a generic feature of robust control.

Date: 2009
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