This is more than just an academic point about what our models should look like, though. Understanding lags is central to day-to-day analysis and interpretation of economic developments. As such, they are central to our work in economic policy. Before I get to that, I’d like to make some brief remarks about the current situation.
We released the Statement on Monetary Policy last week, and earlier today the Governor and some others of us appeared before the House of Representatives Standing Committee on Economics. I don’t have anything new to add but thought it would be worth summarising the main messages from the Statement and the testimony.