last40.txt - Missing this out of the distribution would be justifiable if either i the range of implications for policy miraculously balanced out as

last40.txt - Missing this out of the distribution would be...

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Missing this out of the distribution would be justifiable if either i) the range of implications for policy miraculously balanced out as neutral, or ii) it was ok to wait and see whether there was a deal or not before responding. i) seems highly unlikely, and anyway inconsistent with the rest of the IR forecast. No deal is just a sharp and temporary version of the eventual outcomes, which are colouring the outlook for policy, as MPC are at pains to describe. ii) is a stretch: much better, at the zero bound, in the face of this uncertainty, to build in a response now. But is this omission even internally consistent? Presumably the chance of no deal is weighing on actual data as firms and households ponder the future. But MPC somehow have them slowly waking up to their assumed truth that transit will be smooth? This odd treatment is an application of an old convention that manifests itself in other ways: the assumption that there would simply be no disorderly workout of the Eurozone crisis; the assumption that government will follow through with certainty on fiscal plans as they stand.
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  • Fall '15
  • DR. Aimal

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