William C. Brainard's paper "Uncertainty and the Effectiveness of Policy" examines how uncertainty affects the effectiveness of economic policy. The author argues that traditional economic models often lack a clear definition of "effectiveness," typically equating it with the magnitude of policy impact. However, in a world of uncertainty, the effectiveness of policy is influenced by both the expected magnitude and the predictability of policy responses. The paper discusses how uncertainty in policy responses affects the selection of optimal policy instruments. It shows that when uncertainty exists, the optimal policy differs from the certainty equivalence approach, where policy is based on expected values. In uncertain environments, policy-makers must consider the variability of outcomes and the influence of their actions on this variability. The paper also explores the implications of structural changes on policy effectiveness. Structural changes that alter the response of target variables to policy instruments can affect the effectiveness of policy. The effectiveness depends on how these changes influence the expected magnitude and predictability of policy responses. In the case of one target and one instrument, the paper demonstrates that uncertainty about the response of the target variable to policy actions affects the optimal policy. The optimal policy involves balancing the expected utility of the target variable against the variability of its response. The paper shows that even with uncertainty, policy-makers should use more information than just the expected value of the exogenous variables and the response coefficient. In the case of multiple instruments and targets, the paper argues that the addition of more instruments generally improves the effectiveness of policy, but it also requires careful consideration of the correlations between policy instruments and disturbances. The paper concludes that the effectiveness of policy is not solely determined by the number of instruments but also by the structure of the policy system and the nature of the disturbances. The paper also highlights the importance of considering the relative weights of different targets in the utility function when evaluating the effectiveness of policy. The presence of multiple targets complicates the evaluation of structural changes, as the desirability of a change depends on the relative importance of different targets in the utility function. The paper concludes that evaluating the effectiveness of policy requires a comprehensive understanding of the economic system and the nature of the disturbances.William C. Brainard's paper "Uncertainty and the Effectiveness of Policy" examines how uncertainty affects the effectiveness of economic policy. The author argues that traditional economic models often lack a clear definition of "effectiveness," typically equating it with the magnitude of policy impact. However, in a world of uncertainty, the effectiveness of policy is influenced by both the expected magnitude and the predictability of policy responses. The paper discusses how uncertainty in policy responses affects the selection of optimal policy instruments. It shows that when uncertainty exists, the optimal policy differs from the certainty equivalence approach, where policy is based on expected values. In uncertain environments, policy-makers must consider the variability of outcomes and the influence of their actions on this variability. The paper also explores the implications of structural changes on policy effectiveness. Structural changes that alter the response of target variables to policy instruments can affect the effectiveness of policy. The effectiveness depends on how these changes influence the expected magnitude and predictability of policy responses. In the case of one target and one instrument, the paper demonstrates that uncertainty about the response of the target variable to policy actions affects the optimal policy. The optimal policy involves balancing the expected utility of the target variable against the variability of its response. The paper shows that even with uncertainty, policy-makers should use more information than just the expected value of the exogenous variables and the response coefficient. In the case of multiple instruments and targets, the paper argues that the addition of more instruments generally improves the effectiveness of policy, but it also requires careful consideration of the correlations between policy instruments and disturbances. The paper concludes that the effectiveness of policy is not solely determined by the number of instruments but also by the structure of the policy system and the nature of the disturbances. The paper also highlights the importance of considering the relative weights of different targets in the utility function when evaluating the effectiveness of policy. The presence of multiple targets complicates the evaluation of structural changes, as the desirability of a change depends on the relative importance of different targets in the utility function. The paper concludes that evaluating the effectiveness of policy requires a comprehensive understanding of the economic system and the nature of the disturbances.