Taylor rules, long-run growth and real uncertainty

- We study the effects of real uncertainty on growth under different Taylor-type rules.
- Uncertainty due to investment-specific shocks can be highly detrimental for growth.
- Strong inflation targeting rules neutralize the negative effects of uncertainty.
- The correlation between long-run growth and inflation depends on the rule adopted.

We study the effects of real uncertainty on long-run growth under different Taylor-type rules. We find a non-negligible relationship between real uncertainty and growth, which depends on the source of real uncertainty as well as on the type of the Taylor rule considered.