Bullard backs new approach to forecasting
Idea of economy converging to a single steady state has “likely outlived its usefulness”
US policy-makers may need a "new narrative" to think about the future path of the macroeconomy, Federal Reserve Bank of St Louis president James Bullard said on August 17.
The idea that the economy will tend in the long run to a single steady state is the standard macroeconomic story, and underpins many key models central banks use to make projections. But Bullard told an audience at Washington University in St Louis the idea had "likely outlived its usefulness".
Some aspects of the steady state
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