In effect, as policy becomes less preemptive in stabilizing inflation, it becomes more aggressive in reacting to recent inflation. The second strand of the literature that supports the attenuation result is based on simulation results, as reflected in the work of Orphanides, Rudebusch, Frank Smets, and others.
First, the globalization of financial markets has not materially reduced the ability of the Federal Reserve to influence financial conditions in the United States. But, second, globalization has added a dimension of complexity to the analysis of financial conditions and their determinants, which monetary policy makers must take into account.