Policy choices do matter, and in order to make right choices from the public policy standpoint – I am thinking of high level of employment and sustained, inclusive growth of real incomes – we need solid evidence-based analysis. That is one main reason, why we are here today.
This implies endowing the models with the value of our own judgment, seeking to understand changes, threats and opportunities. It is nothing but the risk management approach applied to monetary policy conduct described yesterday afternoon by Joe Tracy, reflecting the Fed’s view.