The panic that has marked the current financial and economic turmoil may also have long-run implications, said Kevin Warsh, a governor at the Federal Reserve.

Warsh said that the process of an efficient reallocation of capital and labour will prove slower and more difficult than typical after recessions. He said that policymakers should be wary of policies that make the economy less capable of the growth, productivity, and employment trends that have marked the postwar period.

He made the