An element of the so-called “Jackson Hole consensus” was that monetary policy should play a key role in the management of aggregate demand in the short term, whereas fiscal policy was viewed as an inappropriate instrument, mainly because of decision and implementation lags embedded in the policy process. I would argue that we should not overestimate the potency of either policy.
Before the crisis there was a common misperception that monetary policy could focus more on demand management because inflation was durably under control. Proponents of this view found apparent vindication in the phenomenon of the “great moderation” observed in the 20 years before the crisis.