To be more specific, in carrying out our strategies, we would ideally need accurate, quantitative, contemporaneous readings of the current pertinent economic, monetary and financial data. For instance, knowledge of the level of production that would be consistent with stable prices, the socalled “natural” rate of output, would be an important tool for assessing whether the stance of policy is broadly appropriate.
However, estimates of the time-varying natural rate of output, and by implication measures of economic slack, are notoriously very imprecise. Even in hindsight, different estimation methods yield quite dispersed figures. Allowing for data revisions, that is re-appraising those synthetic indicators by aggregating revised data, only makes the uncertainty surrounding those measures more pervasive.