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UID:dd58d0d3dfe99580ed3d6c0d125decd1
CATEGORIES:Seminars
CREATED:20220905T115836
SUMMARY:Michael McMahon - University of Oxford
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nPolicy  Makers' Uncertainty" with Anna Cieslak, Stephen Hanse
 n, and Song Xiao\nAbstract:\nUncertainty is a ubiquitous concern emphasized
  by policymakers. We study how uncertainty affects decision-making by the F
 ederal Open Market Committee (FOMC). We distinguish between the notion of t
 he Fed-driven uncertainty that is induced by the policy choice and the clas
 sic notion of uncertainty that emanates from within the economy and which t
 he Fed takes as given. A simple theoretical framework illustrates how the F
 ed-driven uncertainty introduces a wedge between the standard Taylor-type r
 ule and the optimal decision. Using internal Fed deliberations, we provide 
 the first quantification of the types of uncertainty that the Fed perceives
  and their effects on the policy stance. The FOMC members’ uncertainty abou
 t inflation strongly predicts a more hawkish policy stance that is not expl
 ained either by the internal Fed’s forecasts or by the measures of public u
 ncertainty. In contrast, policymakers' uncertainty about growth has no impa
 ct on policy decisions beyond these standard controls. Consistent with a mo
 del of inflation scares, policymakers’ inflation uncertainty reflects their
  constant worries about losing the nominal anchor. We argue that the desire
  to maintain inflation credibility is an important driver of the FOMC's dec
 isions and provide evidence from the FOMC transcripts consistent with this 
 channel.\n
DTSTAMP:20260913T075242Z
DTSTART:20221024T143000Z
DTEND:20221024T160000Z
SEQUENCE:0
TRANSP:OPAQUE
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