The monetary policy paradigm before the crisis  We do not know yet to what extent the pre-crisis consensus macroeconomic framework has been de-constructed by the crisis. But we do know that the “hubris” of the intellectual paradigm on which that framework was erected has completely vanished. Some aspects of the framework, in my view, will undoubtedly survive the crisis.
One is the great and increasingly shared emphasis on central bank independence. Another is the centrality of price stability for monetary policy. These were the twin foundations of the dominant monetary policy paradigm before the crisis, and the crisis has not challenged or discredited either of them. I will return to the issue of price stability towards the end of my remarks.