What Has—and Has Not—Been Learned about Monetary Policy in a Low-Inflation Environment? A Review of the 2000s


  • This is revised version of the October 2010 paper presented at the conference.


As the world economy recovers from the worst financial crisis and most severe global slump in 75 years, policymakers, regulators, and academics are focusing intensely and appropriately on lessons to be learned for monetary policy. There are certainly many questions to answer. Among the most important are:

Are inflation expectations “well anchored”?

What, if any, influence should asset quantities and prices have on monetary policy?

Do we have sufficient confidence in our alternative monetary policy tools to stabilize the economy at the zero lower bound?