It is a pleasure to be at the U.S. Monetary Policy Forum, which brings together academics, practitioners and market participants to discuss current issues in monetary policy.
There are a few.
Indeed the crisis has shaken the foundations of monetary economics, making this a great time to be an academic but a more challenging one to be a practitioner. The extent to which market participants enjoy the situation appears to fluctuate on a daily basis.
In the crisis economies, policy-makers are battling the possibility of deflation. They are handicapped by transmission mechanisms that are at best impaired and at worst broken. With households and banks in these economies aggressively trying to delever, output gaps remain large and hysteresis threatens.
As a consequence, the horizons of monetary policy have been expanded dramatically. The Federal Reserve has been appropriately and effectively radical by implementing a range of powerful unconventional tools.








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