Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

We made a deliberate decision in constructing the forecast, given the enormous uncertainty about both the size and the composition of those fiscal packages. We had so many moving parts in our baseline forecast that we wanted to present you with that and then show you what the consequences might be, first, of a stimulus package that looks a lot like the one we had this year—which we think probably gave a shock, but a very short-lived shock, to aggregate demand and then faded away. That doesn’t really have many important consequences for the outlook. The second was a much larger package that delivered some stimulus over the next two years. That had a bit of an effect in terms of raising GDP growth and lowering the unemployment rate. But even that $300 billion fiscal package wasn’t enough, in our baseline forecast, to lift the funds rate assumption off the floor. So I think one of the messages would be that, to have a fiscal package that would actually influence your current policy discussion, you have to think both that it would be extremely large and that it would deliver stimulus over an extended period of time to be effective that way.

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