Otmar and I have debated this issue on many occasions, and these discussions--together with recent research carried out at the European Central Bank, the Bank for International Settlements, and elsewhere--have been both challenging and stimulating. The preparation of this talk has afforded me a welcome opportunity to reexamine my thinking on this subject.
So, today, I will review the arguments and the evidence as I see them and draw out the conclusions to which I am currently led. At the outset, let me stress that I will be expressing my own opinions, which are not necessarily shared by my colleagues on the Federal Open Market Committee.