Managing and communicating risk and uncertainty in macroeconomic policymaking

Abstract

In policymaking, as in life, we often must make decisions without knowing how the future will play out. Taking uncertainty into account when making macroeconomic policy allows policymakers to help improve economic outcomes. This article considers three aspects of improving outcomes for fiscal and monetary policymaking: considering risk and uncertainty in decision-making; communicating risk and uncertainty; and designing better tools to communicate risk.