Tuesday, 6 August 2019

Acknowledging and pricing macroeconomic uncertainties

a column by Lars Peter Hansen and Thomas Sargent for VOX: CEPR’s Policy Portal

False pretences of knowledge about complicated economic situations have become all too common in public policy debates.

This column argues that policymakers should take into account what they don’t know in their decision making. It describes a tractable approach for acknowledging, characterising, and responding to different forms of uncertainty, by using theories and statistical methods available at any particular moment.

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