In his formal remarks, Mr. Plosser spent much of his time recounting his career studying business-cycle modeling. He said over the last few years, something big has clearly happened to the economy’s long term momentum.
“It certainly looks like we’ve had a permanent shock” in the wake of the housing-market bust and resulting recession, Mr. Plosser told the audience. But when it comes to understanding the causes and results of that event, observers “won’t know the answer for many years.”
Mr. Plosser, how does this picture qualify as representing your “permanent shock”?
Suggestion: Take time to go to the Romers presentation at the meetings. They have two interesting papers on the block: