But their utility has been limited due to their extreme sensitivity to assumptions, and the difficulty of extracting a simple story on which to base decisions. Yet at least they remind us of the limits to predictability and certainty. Policy strategy What does all this mean for macroeconomic and financial policy strategy in the years ahead?
As a first goal, and one that is unchanged by the crisis, macroeconomic and financial policy should seek to provide a stable backdrop for economic activity. The familiar guideposts of price and financial stability remain relevant. As a second goal, policy might try to buffer and insulate the economy to some extent from disturbances.