Volatility in the growth rates of employment declined, and the link between the health of local banks and growth in the local economy weakened. In my judgment, the U.S. experience with geographic deregulation provides some valuable lessons for the European Union, so let me turn to that experience now.
For instance, research suggests that refraining from liftoff until inflation reaches 2 percent could lead to some modest temporary overshooting, which would help offset the previous underperformance.12 Balance sheet policies can help extend accommodation by more directly influencing the interest rates that are relevant for household and business borrowing and investment.