Central bank's weak response to bubbles leads to economic indeterminacy.
The article presents a new method to handle uncertainty in economic models. By adding extra equations to the model, researchers can ensure a clear solution even when the original model is unclear. This method allows for accurate estimation of models, even when the exact boundaries of certainty are unknown. Applying this approach to a specific economic model, researchers found evidence that the central bank was not responding effectively to economic bubbles during a certain time period.