Of course, the relative balance between macroprudential and fiscal policies depends on the nature of the cyclical shocks facing the economy: during a phase of easy international credit conditions, macroprudential policy will be to the fore; if the cycle is being driven by productivity shocks, fiscal policy must take on the lead role in counter-cyclical stabilisation.
In light of the policy actions the FOMC has taken to date, as well as the economy’s natural recovery mechanisms, we might have hoped for greater progress by now in returning to maximum employment. Some have taken the lack of progress as evidence that the financial crisis caused structural damage to the economy, rendering the current levels of unemployment impervious to additional monetary accommodation.