Uncertainty, rational expectations and stabilization policy

A methodology for the design of macroeconomic policy that addresses the general objections to stabilization policy put forward by a number of eminent economists is proposed. Their first concern, which goes back to M. Friedman´s long, variable, and uncertain lags, has to do with model uncertainty. The other arguments concern rational expectations and can be summarized as the Lucas critique and the problem of credibility. Policies for both the single, open economy and international policy coordination, in the form of appropriately designed simple feedback rules, are advocated