8  BIS Review 27/2009  Empirical evidence seems to support that type II errors are not uncommon. In particular, Jarociński and Smets (2008) estimate a VAR model for the US, using real GDP, the GDP deflator, the federal funds rate, and so on, to answer the following two questions.
20 First, “Was US monetary policy excessively expansionary at the beginning of this millennium?” In other words, was the federal funds rate kept low for too long between 2002 and 2004, on average, given the circumstances prior to that period? The answer is “Yes”.