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The Role Of "Determinacy" In Monetary Policy Analysis

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Executive Summary

It is well known that the concept of "Determinacy" - a single stable solution - plays a major role in contemporary monetary policy analysis. But while determinacy is desirable, other things equal, it is not necessary for a solution to be plausible and is not sufficient for a solution to be desirable. There is a related but distinct criterion of "Learnability" that seems more crucial. This paper argues that recognition of information feasibility requires that a candidate solution must, to be plausible, be quantitatively learnable on the basis of information generated by the economy itself.

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