More generally, this literature suggests that central banks should be cautious about boldly acting on the predictions and policy prescriptions of any one model, especially given that policymakers usually are unsure about the nature and persistence of the shocks hitting the economy.
Central bankers around the world certainly seem receptive to taking a gradualist and cautious approach to policy under most circumstances, as indicated by (among other things) their apparent tendency to smooth interest rates. The behavior of the Federal Reserve during the second half of the 1990s illustrates this approach to policy. During this period, incoming data suggested that trend productivity might be accelerating.