From the second half of 2009, growth prospects resumed and macroeconomic uncertainty – measured by the dispersion of those forecast distributions – declined significantly. The densities become “thinner” as a larger probability mass concentrates around the mean, while the mean growth forecast itself turns positive.
The second phase of the crisis As I mentioned already, the “d” factor is the loose end in the transmission mechanism. It is an important determinant of long-term interest rates. But it is not controlled by the central bank. (See slide 18).