We hope that, with price stability well established and various other changes in the economy (on which, more later), the amplitude of cycles might be lessened and policy may be more effective. We hope, also, that prices are well anchored by America’s good record of low inflation. But the fundamental law of economics -- scarcity -- has not been repealed.
The factors that are held to be responsible for the New Era -- “globalisation of production, changes in finance, the nature of employment, government policy, emerging markets, and information technology” (Weber 1997, p. 71) -- will all be helpful, but they raise the long-term sustainable growth rate only to the extent to which they raise productivity growth on an on-going basis.