But to the extent that this resilience reflects increased flexibility of the economy, we should be searching for policies that will further enhance economic flexibility and dismantling policies that contribute to unnecessary rigidity. The more flexible an economy is, the greater is its ability to self-correct to inevitable disturbances, reducing the size and consequences of cyclical imbalances.
An implication is that, at any given point in time, the economy is more likely to be producing close to its productive potential. So often, discussion of policies intended to improve macroeconomic performance have focused solely on traditional monetary and fiscal policies.