The only outcome consistent with the Fisher equation holding and the FOMC’s zero interest rate policy is that the “long run” is considerably longer than 4.5 years.

In order to maintain its credibility, however, the FOMC will have to take actions consistent with achieving its stated inflation objective.

In contrast, most economists believe that central banks have little or no ability to directly affect employment. The effect of monetary policy actions on employment is indirect and stems from central banks’ ability to affect output growth in the short run and achieve price stability in the...

With the funds rate driven to levels far below its target, the FOMC had no recourse but to adjust the target accordingly.

The average relationship between changes in the 10-year Treasury yield and changes in the funds rate over the 1987-2007 sample period is not indicative of the relationship between changes in the funds rate and changes in the 10-year Treasury yield that existed for more than a decade prior to the...

Neither core nor headline inflation measures can consistently and reliably predict medium-term inflation well enough to be of much use to policymakers.>