The limits of monetary policy, part 1

Editor’s note: This is the first of a two-part post on monetary policy. Part two can now be read here.
Today’s commentary
On Thursday, Philadelphia Federal Reserve President Charles Plosser gave a speech called “A Limited Central Bank” that I highly recommend. The underlying theme of Plosser’s speech was that central banks should have a limited role but that they are being called on to do ever more. Below I want to expand on this theme in view of comments from Larry Summers on central banks and secular stagnation. 
I had this post teed up to write on Friday before I had even heard about Larry Summers’ comments on secular stagnation and monetary policy. But his comments give this topic extra importance because it demonstrates that - contrary to what I write here - policy makers see monet...


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