13 The most recent Monetary Policy Report features a box on policy rules, including a Taylor-type “shortfalls” rule in which the federal funds rate reacts only to shortfalls of employment from the Committee’s best judgment of its maximum level but reverts to the rule previously described once that level of employment is reached (see figure 4).
14  (2000) and Smets (2002), “gap” uncertainty is relevant for the formulation of simple policy rules that feedback on endogenous macro outcomes (for, say, inflation and unemployment ) rather than on “primitive” shocks (such as to productivity or demand). In fact, in the former case, certainty equivalence will in general not hold.