9  Research suggests that, all else being equal, increased uncertainty and greater downside risk in the vicinity of the effective lower bound on nominal interest rates call for greater gradualism under optimal policy than would be the case if short-term nominal interest rates were appreciably above zero. This phenomenon is known as “policy attenuation” in the economic literature.
For a discussion, see, for example, Adam and Billi (2007), Nakata (2012), Evans and others (2015), and Gust, Johannsen, and Lopez-Salido (2015). 10  With regard to the Federal Reserve’s balance sheet, the FOMC could increase its size by resuming largescale purchases of longer-term Treasury securities and agency mortgage-backed securities.