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The Effects Of Monetary Policy On Unemployment Dynamics Under Model Uncertainty. Evidence From The US And The Euro Area

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Executive Summary

This paper explores the role that the imperfect knowledge of the structure of the economy plays in the uncertainty surrounding the effects of rule-based monetary policy on unemployment dynamics in the euro area and the US. The authors employ a Bayesian model averaging procedure on a wide range of models which differ in several dimensions to account for the uncertainty that the policymaker faces when setting the monetary policy and evaluating its effect on real economy.

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