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

Well, I can speak to the Greenbook-consistent measure, and perhaps Vincent will want to talk a bit about the simulations of the Bluebook. One thing that you have to keep in mind is that the Greenbook-consistent measure of R* is the level of a real interest rate that would be required for the output gap to return to zero in twelve quarters. In some sense, given that is what’s built into the Greenbook forecast, the current level of the real interest rate is delivering that particular outcome. It’s not that we have those longer-run estimates of R*, which are, in essence, the monetary policy that is assumed to return the economy to equilibrium over the next three years and then beyond that to stabilize the economy. That’s a different construction. The Greenbook- consistent R* is answering a very specific question that is of limited value. Those longer-run simulations give you a clearer picture of where we think real interest rates would have to be to equilibrate the economy over the longer haul, not just over the short run.

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