Conclusions Economists have studied in detail the implications of uncertainty for the conduct of monetary policy. Unfortunately, uncertainty comes in more than one flavor, and the appropriate policy response depends on the costs it imposes. In the certainty equivalence approach, uncertainty can be ignored. At the same time, in some cases, policy should respond less strongly, while in others, it should respond more strongly. And finally, some of the uncertainty in the economy may even be traced to the public's uncertainty about the future course of policy.
Uncertainty is pervasive, but there is no one answer about how to deal with it.
Central Banking in Theory and Practice. Brainard, William. 1967. Uncertainty and the Effectiveness of Policy. American Economic Review 57, pp. A New Keynesian Perspective.